resilience not only of banks but also of the non - financial sector in the euro area. private sector debt ratios have declined in recent years. there are so far no indications of excessive credit growth or broad - based asset price misalignments in the euro area. however, developments in asset prices require close monitoring as risk - taking continues to gain momentum in financial markets and valuations are becoming stretched in some market segments. the ecb expects the national macroprudential authorities in the euro area to remain vigilant and continue to use the macroprudential policy instruments at their disposal to counteract any emerging risks when necessary. on its part, the ecb will contribute within its macroprudential mandate. the positive developments in the euro area are not independent of the global growth momentum. open trade, investment and sustainable financial flows play a key role in the cross - border diffusion of new technologies that drive forward efficiency improvements. they need to be underpinned by effective multilateral cooperation, both in the field of trade and in financial regulation and supervision, to help avoid major disruptions in global financial stability. preserving openness is crucial if the global economy is to thrive and to secure its growth potential. in the euro area, decisive contributions from areas beyond monetary policy remain necessary to raise the longer - term growth potential and reduce vulnerabilities. the current favourable economic conditions, in a politically stable environment, should help euro area countries to step up the implementation of reforms and thereby spur innovation and investment, further creating new jobs and reducing unemployment. a full and consistent application of the eu ’ s economic governance framework, including the european semester and the macroeconomic imbalance procedure, remains crucial to effectively incentivise national ownership of structural reforms. the current solid economic expansion also calls for fiscal buffers to be rebuilt in line with the requirements of the stability and growth pact. the full and consistent implementation of the pact is essential to ensure credibility and confidence in the eu fiscal framework, to rebuild fiscal buffers in national budgets for potential challenges ahead and to safeguard public debt sustainability. this is particularly important in countries where government debt remains high. in addition, all euro area countries would benefit from intensifying efforts towards achieving a more growth - friendly composition of public finances. the economic and monetary union ( emu ) should be strengthened, first by implementing what has already been agreed and finishing the common projects we have started : completing the banking union, strengthening the governance and the operational capacity of

in the fourth quarter of 2017, following similar growth in the previous quarter. this resulted in an average annual growth rate of 2. 4 % in 2017 – the highest since 2007. the latest economic indicators suggest some moderation in the pace of growth since the start of the year. this moderation may in part reflect a pull - back from the high pace of growth observed at the end of last year, while temporary factors may also be at work. overall, however, growth is expected to remain solid and broad - based. our monetary policy measures, which have facilitated the deleveraging process, should continue to underpin domestic demand. private consumption is supported by ongoing employment gains, which, in turn, partly reflect past labour market reforms, and by growing household wealth. business investment continues to strengthen on the back of very favourable financing conditions, rising corporate profitability and solid demand. housing investment continues to improve. in addition, the broad - based global expansion is providing impetus to euro area exports. the risks surrounding the euro area growth outlook remain broadly balanced. however, risks related to global factors, including the threat of increased protectionism, have become more prominent. 1 / 2 bis central bankers'speeches euro area annual hicp inflation increased to 1. 3 % in march 2018, from 1. 1 % in february. this reflected mainly higher food price inflation. on the basis of current futures prices for oil, annual rates of headline inflation are likely to hover around 1. 5 % for the remainder of the year. measures of underlying inflation remain subdued overall. looking ahead, they are expected to rise gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack and rising wage growth. turning to the monetary analysis, broad money ( m3 ) continues to expand at a robust pace, with an annual growth rate of 4. 2 % in february 2018, slightly below the narrow range observed since mid - 2015. m3 growth continues to reflect the impact of the ecb ’ s monetary policy measures and the low opportunity cost of holding the most liquid deposits. accordingly, the narrow monetary aggregate m1 remained the main contributor to broad money growth, continuing to expand at a solid annual rate. the recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. the annual growth rate of loans to non - financial corporations stood at 3. 1 % in february 2018, after 3. 4 % in january and 3. 1 % in