##atility, the governing council was unanimous in its assessment in june that we should look through these developments and maintain a steady monetary policy stance. at the same time we are aware that at very low levels of interest rates, asset prices – bond prices in particular – tend to show higher volatility. the drop in the real interest rate, general relaxation in financial conditions and improved confidence will work their way through to the economy to boost demand and drive faster inflation. it will, however, still take time until we see the full impact. [ slide 13 ] bis central bankers ’ speeches monetary policy transmission to the real economy is improving the expanded purchases started at the beginning of march. the full impact of our measures, especially if accompanied by firm actions from other policymakers, will be seen in the months and years ahead. [ slide 14 ] monetary policy measures support bank lending recovery in bank lending and strengthening of other sources of financing are important factors behind the current monetary policy in the euro area. our policies are also improving the credit channel, which is confirmed by the fact that credit to the private sector is gradually picking up. monetary policy transmission via the banking system requires that banks have sufficient capital to increase their lending, and hence risk - taking. in 2014, the ecb conducted a comprehensive assessment of the balance sheets of banks in the euro area. completion of the comprehensive assessment, together with the steps taken by the ecb, is improving monetary policy transmission to the real economy via bank lending. monetary policy transmission through the banks is, however, still beset with challenges. although the banking system is currently stronger as a whole, the operating environment remains challenging. [ slide 15 ] monetary policy transmission via bank lending is improving the ecb ’ s monetary policy measures enhance financial intermediation in a number of ways. they lower funding costs for banks, which should make lending cheaper and more profitable, thereby boosting the volume of lending. most of all, banks benefit from the ecb ’ s measures via their positive impact on the real economy. [ slide 16 ] monetary policy transmission to non - financial firms improved, but still uneven these extraordinary monetary policy measures have contributed to a broad - based easing in financial conditions and more favourable borrowing conditions for firms and households. they support economic activity in all countries, especially in those having suffered most from stressed conditions in recent years but having at the same time executed substantial structural measures to improve the performance of their respective economies in the longer run. [ slide 17 ] corporate bond yields

remain low, some reversal recently the importance of market funding for non - financial corporations is increasing in the euro area. the asset purchases support the corporate bond markets, as investors selling government bonds are expected to switch to higher - risk corporate bonds, reflecting the portfolio balancing effect. corporate bond yields reached a record low in the euro area in early 2015. although corporate emissions have partially compensated for the decline in bank lending in the case of large corporations, smes do not have the same access to alternative sources of funding and are therefore still highly dependent on bank lending. the accommodative monetary policy is also pushing up share prices. this could boost corporations ’ willingness to invest, as the market value of the corporations rises while their funding costs decline. [ slide 18 ] corporate sector debt ratios declining however, the low price and improved availability of credit will be insufficient to restore more vigour to the economy if very indebted corporations decide to reduce their debt instead of investing. the debt ratio of non - financial corporations in the euro area ( aggregate debt relative to gdp ) has come down from the heights of 2009. the euro area corporate sector in general cannot be considered to be particularly indebted. bis central bankers ’ speeches there are, however, large differences between countries. high corporate debt ratios in some countries may still be a partial cause of the weak developments in corporate borrowing and investment. the more relaxed financing conditions for non - financial corporations and the reasonable level of indebtedness in the euro area ’ s corporate sector should, however, provide fertile ground for recovery in investment. [ slide 19 ] average interest rates on new housing loans have declined from the perspective of achieving price stability it is vital that monetary policy measures have a positive effect not just on investment, but also on consumption. the process of reducing the household debt burden is still hampering consumption in several euro area countries. the accommodative monetary policy stance can help with unravelling household debt. the average interest on the euro area household loan stock has already come down to around 3 % and can be expected to fall somewhat further. there are, however, large differences between euro area countries in the transmission of monetary policy via households to the real economy. [ slide 20 ] eurosystem projections in june 2015 as a result of the monetary policy measures taken between june 2014 and january 2015, both the inflation and growth outlook have improved considerably. eurosystem staff projections published last week point to a sustained recovery that leads to