the basis of current futures prices for oil, inflation rates could turn out somewhat higher than expected a few months ago, but they should decline to below 2 % again in the course of next year. over the policy - relevant horizon, in an environment of modest growth in the euro area and well - anchored long - term inflation expectations, underlying price pressures should remain moderate. the september 2012 ecb staff macroeconomic projections for the euro area foresee annual hicp inflation in a range between 2. 4 % and 2. 6 % for 2012 and between 1. 3 % and 2. 5 % for 2013. these projection ranges are somewhat higher than those contained in the june 2012 eurosystem staff macroeconomic projections. risks to the outlook for price developments continue to be broadly balanced over the medium term. upside risks pertain to further increases in indirect taxes owing to the need for fiscal consolidation. the main downside risks relate to the impact of weaker than expected growth in the euro area, particularly resulting from a further intensification of financial market tensions, and its effects on the domestic components of inflation. if not contained by effective action by all euro area policy - makers, such intensification has the potential to affect the balance of risks on the downside. turning to the monetary analysis, the underlying pace of monetary expansion remained subdued. the annual growth rate of m3 increased to 3. 8 % in july 2012, up from 3. 2 % in june. the rise in m3 growth was mainly attributable to a higher preference for liquidity, as reflected in the further increase in the annual growth rate of the narrow monetary aggregate m1 to 4. 5 % in july, from 3. 5 % in june. the annual growth rate of loans to the private sector ( adjusted for loan sales and securitisation ) remained weak at 0. 5 % in july ( after 0. 3 % in june ). annual growth in mfi loans to both non - financial corporations and households remained subdued, at – 0. 2 % and 1. 1 % respectively ( both adjusted for loan sales and securitisation ). to a large extent, subdued loan growth reflects a weak outlook for gdp, heightened risk aversion and the ongoing adjustment in the balance sheets of households and enterprises, all of which weigh on credit demand. furthermore, in a number of euro area countries, the segmentation of financial markets and capital constraints for banks continue to weigh on credit supply. looking ahead, it is essential

for extraordinary measures. the bsp decisively implemented a wide range of policy responses, including unprecedented ones, to squarely deal with the crisis. besides cuts in the policy rate and the reserve requirement ratio — which are typical central bank actions to support an economy — the bsp also did quite a lot of bold measures to cushion the impact of the crisis, such as the following : ( i ) p540 billion worth of provisional advances to the national government, after the previous p300 - billion repurchase agreement was settled [ in full in september ] ; ( ii ) advance remittance of p20 billion worth of dividends to the national treasury ; 2 / 6 bis central bankers'speeches ( iii ) purchase of government securities in the secondary market ( iv ) counting of loans to msmes as part of banks ’ compliance to the reserve requirement ; ( v ) reduction of risk weight of loans to msmes ; ( vi ) increase in the single borrower ’ s limit ; ( vii ) assignment of zero risk weights to loans guaranteed by government institutions ; ( viii ) relaxed terms for financing facilities ; ( ix ) waived fees on electronic fund transfers ; and ( x ) increased limit to real estate loans of banks from 20 to 25 % of loan portfolio ; with the measures we have implemented, the bsp has so far injected p1. 5 trillion in liquidity to the financial system, equivalent to 7. 6 percent of the country ’ s gross domestic product ( gdp ). united. in the philippines, there is strong coordination between fiscal and monetary authorities to ensure that our policy responses are in sync. moreover, local government units and national government agencies worked as one to ensure a holistic approach to the government ’ s crisis response. in addition, congress passed two “ bayanihan ” laws promptly showing strong bi - partisan support for the executive department ’ s crisis initiatives. also worth noting is the active private - sector response, evidenced in part by the altruistic actions of many corporations. the bsp recognizes the significant contribution of banking industry members. their willingness to comply with the call for loan payment extensions, as well as their overwhelming response to the call for the temporary waiving of fees on electronic fund transfers have provided significant relief to households and businesses. finally, structural and development reforms. to reiterate, the philippines aims to become an economic champion in the post - covid era, and the bsp will work tirelessly to help make this happen. to get to the