country - specific recommendations, or csrs – issued under the european semester – should be given similar importance. csrs provide guidance to member states on how to address reforms and macroeconomic 3 / 5 bis central bankers'speeches imbalances. they have a broad focus on fiscal - structural policies, framework conditions, and labour and product markets. in light of persistent imbalances, the track record in csr implementation remains poor. over the past five years, most csrs were, at best, only partly addressed by member states. this is unsatisfactory, especially as the economic recovery provides a favourable environment for reform. at the same time, member states should agree on broad - based and balanced institutional reforms to facilitate better collective outcomes. these dimensions – action at the national and supranational level – should be seen as complementary. improving the crisis management framework at the supranational level would make emu more resilient. in this regard, the ecb welcomes the commitment to strengthen the esm made at the recent euro summit. moreover, the euro area would benefit from a common stabilisation function. such an instrument could provide macroeconomic support in the event of euro area - wide recessions, thereby maintaining convergence and reducing the burden on monetary policy. however, such a fiscal instrument should not undermine incentives for member states to pursue sound policies at the national level. conclusion growth in the euro area economy is solid and broad - based. the underlying strength of the economy continues to support the sustained adjustment of inflation towards our objective. following strong growth rates in 2017, the recovery in the euro area has slowed down in 2018, however. the duration of the current expansion, which began in 2013, is still below the historical average. its amplitude, the percentage gain in gdp relative to the trough, is also low by historical standards. at the same time, downside risks to growth, notably related to the threat of protectionism and the rise in trade tensions, remain prominent. the outlook for us monetary policy moves and vulnerabilities in emerging markets add to the overall uncertainty, as does the limited progress on the brexit discussion. solidifying the institutional architecture of emu is essential in order to foster cohesive economic performance without fragmentation or excessive imbalances. monetary policy has played the key role since the financial crisis but cannot remain the only game in town. we now need action in other policy areas – notably fiscal policy and structural reforms. there is

precautionary savings. the investment outlook remains solid on the back of improving profitability and favourable financing conditions. according to the july bank lending survey, credit standards for loans to enterprises and households have loosened further. moreover, net demand for all types of loans has increased and is expected to grow in the next quarter too, supporting loan growth. in spain, credit standards for new loans eased across all segments. while net demand for loans to enterprises remained unchanged, it increased for loans to households. we are therefore confident that the underlying strength of the euro area economy will continue to support the sustained convergence of inflation to our aim in the medium term. according to the flash estimates, hicp inflation edged down to 2. 0 % in august from 2. 1 % in july, mainly reflecting higher energy prices. on the basis of the latest oil futures prices, headline 1 / 5 bis central bankers'speeches inflation is expected to hover around the current level for the rest of the year. although measures of underlying inflation remain generally muted, they have risen from previous lows. looking ahead, underlying inflation is expected to pick up towards the end of the summer, supported by our monetary policy measures and strengthening domestic price pressures, which are sufficiently robust to counter the downward pressure from the euro ’ s appreciation in 2017. domestic price pressures have gradually risen on the back of the ongoing economic expansion, the resulting absorption of economic slack and rising wage growth. in particular, the tightening in labour markets supports the pick - up in nominal wage growth both across countries and sectors. non - wage domestic cost pressures and the stronger pricing power of domestic firms are further contributing to higher prices. moreover, domestic producer price inflation for non - food consumer goods increased further in june, with the year - on - year growth rate at its highest level since late 2012. services producer price inflation has been on an upward trajectory since the second quarter of 2016. against this backdrop, the ecb ’ s governing council carried out a thorough assessment of price and wage pressures and the inflation outlook at its meeting in june of this year. monetary policy stance the governing council carefully reviewed the progress achieved towards a sustained adjustment in the path of inflation, guided by three criteria : convergence, confidence and resilience. for convergence, headline inflation should be on track to reach levels consistent with the governing council ’ s inflation aim of below, but close to, 2 % over the medium term. in line with this criterion, the june eurosystem staff projections see headline