as well as on geopolitical, energy and exchange rate developments. turning to the monetary analysis, recent data confirm robust growth in broad money ( m3 ). the annual growth rate of m3 was 5. 0 % in may 2015, compared with 5. 3 % in april. annual growth in m3 continues to be strongly supported by its most liquid components, with the narrow monetary aggregate m1 growing at an annual rate of 11. 2 % in may. loan dynamics continued to improve. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) increased to 0. 1 % in may, up from – 0. 1 % in april, continuing its gradual recovery from a trough of – 3. 2 % in february 2014. this is consistent with the positive evidence from the bank lending survey for the second quarter of 2015. banks reported a continued net easing of credit standards on loans to enterprises which was stronger than expected in the previous survey round. net demand for loans to enterprises increased further, supported by demand for credit related to fixed investment. fragmentation in terms of credit demand in individual countries decreased and the targeted longer - term refinancing operations helped to improve the terms and conditions for credit supply. despite these improvements, the dynamics of loans to non - financial corporations remain subdued. they continue to reflect the lagged relationship with the business cycle, credit risk, credit supply factors, and the ongoing adjustment of financial and non - financial sector balance sheets. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) increased to 1. 4 % in may 2015, after 1. 3 % in april. overall, the monetary policy measures we have put in place since june 2014 provide clear support for improvements both in borrowing conditions for firms and households and in credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirms the need to maintain a steady monetary policy course, firmly implementing the governing council ’ s monetary policy decisions. the full implementation of all our monetary policy measures will provide the necessary support to the economic recovery in the euro area and lead to a sustained return of inflation rates towards levels below, but close to, 2 % in the medium term. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. however, in order to reap the full benefits from

consolidation starting in 1987. this programme was based on tight expenditure control via subsidy cuts, social security reform and a streamlining of the public sector and control of public expenditure. ireland ’ s experience, similar to the danish experience in 1983 - 89, clearly shows how policies geared to fiscal consolidation do not necessarily entail contractionary effects on real aggregate demand and economic activity. on the contrary, in these two countries, in spite of the tightening policies undertaken, the rate of growth showed a significant increase in relation to previous years. in particular, in these countries, significant budget consolidation based on spending reduction enhanced the long term fiscal sustainability and increased the policy credibility of a more favourable tax regime. regarding ireland, the budget deficit was reduced from 10. 1 % of gdp in 1986 to 1. 7 % in 1989, while the debt ratio declined from 113 % of gdp to 100. 4 % of gdp ; over the same period gdp growth accelerated from 0. 3 % to 6. 2 % ; the overall consolidation effort, as measured through the structural fiscal balance, amounted to 5. 1 % of gdp over these three years. in the years afterwards, ireland continued to enjoy high rates of gdp growth and kept large structural fiscal surpluses ( almost always above 5 % of gdp ), thus allowing for a steady and rapid decline of the debt ratio ( which reached 32. 4 % of gdp in 2003 ). the irish and danish experience brings evidence that expansionary expectation effects may dominate on the contractionary effects of a fiscal consolidation. in both cases there is a considerable evidence that the consumer boom was prompted by the wealth effects of cuts in public spending, as a signal of lower future taxes, concomitantly to the wealth effects implied by the fall in interest rates. on the supply side, a low tax environment has underpinned the pick up in economic activity in ireland. coming back to europe as a whole, confidence among european citizens is vital for a stronger economic recovery and sustained growth. the ecb ’ s governing council recognises that the still moderate level of consumer confidence is related in part to the debate about the appropriate path for fiscal policy and structural reform in many countries in the euro area. also for this reason, progress with the implementation of the necessary structural reforms and more determined efforts to establish sound fiscal positions over the medium term are key to stronger confidence. the successful implementation of structural economic and fiscal reforms requires significant and tireless efforts of explanation, pedagogy and adequate public communication. over time