in 2021. compared with the december 2018 eurosystem staff macroeconomic projections, the outlook for real gdp growth has been revised down substantially in 2019 and slightly in 2020. the risks surrounding the euro area growth outlook are still tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets. according to eurostat ’ s flash estimate, euro area annual hicp inflation was 1. 5 % in february 2019, after 1. 4 % in january, reflecting somewhat higher energy and food price inflation. on the basis of current futures prices for oil, headline inflation is likely to remain at around current levels before declining towards the end of year. measures of underlying inflation remain generally muted, but labour cost pressures have strengthened and broadened amid high levels of capacity utilisation and tightening labour markets. looking ahead, underlying inflation is expected to increase over the medium term, supported by our monetary policy measures, the ongoing economic expansion and rising wage growth. this assessment is also broadly reflected in the march 2019 ecb staff macroeconomic projections for the euro area, which foresee annual hicp inflation at 1. 2 % in 2019, 1. 5 % in 2020 and 1. 6 % in 2021. compared with the december 2018 eurosystem staff macroeconomic projections, the outlook for hicp inflation has been revised down across the projection horizon, reflecting in particular the more subdued near - term growth outlook. turning to the monetary analysis, broad money ( m3 ) growth decreased to 3. 8 % in january 2019, from 4. 1 % in december 2018. m3 growth continues to be backed by bank credit creation, notwithstanding a recent moderation in credit dynamics. the narrow monetary aggregate m1 remained the main contributor to broad money growth. the annual growth rate of loans to non - financial corporations declined to 3. 3 % in january 2019, from 3. 9 % in december 2018, reflecting a base effect but also, in some countries, the typical lagged reaction to the slowdown in economic activity, while the annual growth rate of loans to households remained at 3. 2 %. borrowing conditions for firms and households are still favourable, as the monetary policy measures put in place since june 2014 continue to support access to financing, in particular for small and medium - sized enterprises. the policy measures decided today, and in particular the new series of tltros, will help to ensure that bank lending conditions remain favourable going forward

low. the evidence, however, also suggests that financial institutions pursue the deleveraging process mainly by tightening credit standards and curbing new lending. monetary policy against this background of rapid disinflation, weak economic activity and persisting financial market stresses, the ecb will continue to face the twin challenge of securing price stability and contributing to financial stability in the euro area. to meet this challenge, the conduct of unit labour costs in the euro area rose by 3. 6 % in the third quarter of 2008 compared with 3. 2 % in the second quarter, despite the decline in gdp growth occurred over that period. monetary policy by the ecb has been based on its medium - term oriented strategy and a fundamental principle : the separation of the monetary policy from liquidity management. the monetary policy stance is defined by the level of the key ecb interest rates and is determined with a view to achieving the primary objective of preserving price stability over the medium term. liquidity management aims at ensuring the orderly functioning of money markets which is necessary for the efficient transmission of monetary policy and for the mitigation of financial stability risks. the separation principle implies that the policy interest rate is not employed to alleviate stresses in the financial system if upside risks to price stability prevail. if the preservation of price stability is secured over the medium term and will not be jeopardised by a change in the monetary policy stance, the interest rate can be adjusted to mitigate the impact of financial market stresses on the economy, including their potential effect on medium - term price developments. for more than a year since the outbreak of the financial turmoil in august 2007, the ecb did not reduce its key policy rates in view of significant medium - term inflation risks, but intervened in a decisive manner in the money markets, by taking “ unprecedented ” measures to provide liquidity so as to maintain orderly market conditions and contain the spillover effects of financial market tensions on the real economy. since october 2008, following the intensification and broadening of the financial crisis and in view of the significant change in the balance of risks to price stability, the ecb responded in a timely manner both with an unprecedented – in terms of speed and magnitude – easing of monetary policy ( having reduced its policy rate by 225 basis points in a period of three months ) and by taking unprecedented – and indeed “ unconventional ” or “ non - standard ” measures – in the money markets by providing unlimited funding in euro ( but also in other curre