agents ( governments, firms and households ). this leads us to monitor a large set of indicators, with a multifaceted and holistic approach. let me add some comments about the recent increase we have seen in long - term rates, following although to a lesser extent the move in the us. this increase has different causes, and hence calls for different reactions and instruments. first, in the euro area, the latest consumer price data have surprised on the upside, and there are some signs of an upturn in inflation expectations. this is actually good news, as philip lane noted last week. 1 that said, this rise shouldn ’ t be overstated ; it primarily reflects temporary factors rather than a persistent and significant change in the inflation path. the euro area economy is in a different situation compared with that of the us ( in terms of real activity, output gap and fiscal stimulus ). there is no risk of overheating in europe. second, this less disinflationary environment shouldn ’ t raise questions about our future monetary policy, and our reaction function. let me reiterate a strong conviction about our inflation objective : it is flexible, symmetric and medium - term. to put it clearly, these last two imperatives mean that 1 / 4 bis central bankers'speeches we cannot completely ignore the past inflation shortfalls, and that in the future we should be ready to accept inflation above target for some time. as necessary, our forward guidance could be strengthened to make this tolerance explicit. and third, there are other elements in this tightening of financing conditions, including excessive spillovers and tensions on the term premia. in so much as this tightening is unwarranted, we can and must react against it, starting with an active flexibility of our pepp purchases, which we have made possible since its inception in march 2020, and enhanced last december. ii. financial stability lessons have to be fully drawn from the past experiences about the obvious costs of financial crises. history has shown that price stability is not a sufficient condition to ensure financial stability. furthermore, low - for - long interest rates, in a context of a decreasing natural rate of interest, can contribute to the build - up of systemic risk and financial vulnerabilities, by encouraging excessive risk - taking and financial misalignments. 2this matters for monetary policy. of course, macroprudential policy is the first and main line of defence, and the toolkit has been considerably enhanced in recent years

the main drivers of this sector, whereas most of other branches of the services sector contracted, year on year. likewise, the industry sector shrank by 8. 5 % in the second quarter, after its positive performance in the last six quarters. industry sector deceleration during this quarter was largely influenced by slashed output in “ energy, water and gas ”, whereas extraction and processing industry continued their upward value - added. after its surge in the first quarter of 2011, the construction sector contracted again in the second quarter, posting annualised downgrade of 1. 7 %. as regards aggregate demand, during the first half of the year, economic growth was supported mainly by the public sector and foreign demand contributions, whereas internal demand was lacklustre. available data suggest that private consumption and investments were sluggish during the first half of the year, thus conditioning the below - potential growth of the economy during this period. private consumption continues to reflect consumers ’ reluctance to spend and their inclination to save. domestic consumption has not totally reflected higher available income generated by higher wages and employment rates, or expansion of funding resources, in the form of consumer loan growth during 2011. in particular, remittances shortfall during the first nine months of the year may have lessened consumption for a part of albanian households. in addition, relatively high import prices, which burdened albanian households ’ budget in the first half of the year, may have impacted consumption negatively. against this performance of consumption during the first half, improved balances for large purchases – as suggested by the consumer confidence survey – and more consumer loans granted during the second half, suggest for higher consumption in the third and fourth quarters of 2011. subdued consumer spending and presence of spare capacities in the economy dampened businesses ’ demand for new investments. in parallel, higher lending prudence by banks may have discouraged, in part, the demand for investment loans. foreign direct investments were down during the first quarter of the year. higher capital expenditures in the last quarter are expected to generate higher contribution of this bis central bankers ’ speeches component to aggregate demand at year - end. in the mean time, improved lending terms in 2012 are expected to be translated into higher support for the system with investment loans and higher contribution to economic growth by this component of aggregate demand. fiscal policy was stimulating in 2011, materialised in positive contribution of public spending to aggregate demand. public spending and budget deficit growth rates moderated after the first quarter, settled at low levels in the second