strong loan growth to non - financial corporations suggests that the supply of bank credit to firms in the euro area has not been significantly impaired by the financial turmoil thus far. further data and analysis will be required in order to obtain a more complete picture of the impact of the financial market developments on banks ’ balance sheets, financing conditions and money and credit growth. to sum up, a cross - check of the outcome of the economic analysis with that of the monetary analysis clearly confirms the assessment that upside risks to price stability prevail over the medium term, in a context of very vigorous money and credit growth and with no significant signs of supply constraints on bank loans to households and non - financial corporations. the economic fundamentals of the euro area are sound. incoming macroeconomic data continue to point to moderate but ongoing real gdp growth. however, the level of uncertainty resulting from the turmoil in financial markets remains unusually high and tensions may last longer than initially expected. against this background, we emphasise that the firm anchoring of medium to longer - term inflation expectations is of the highest priority to the governing council. we believe that the current monetary policy stance will contribute to achieving this objective. the governing council remains strongly committed to preventing second - round effects and the materialisation of upside risks to price stability over the medium term. we will continue to monitor very closely all developments over the coming weeks. regarding fiscal policies, the intentions reflected in the latest round of stability programmes imply a rise in the euro area general government deficit ratio in 2008. further fiscal pressures are likely to arise as overly optimistic macroeconomic assumptions are already being revised downwards and political demands for fiscal loosening are increasing. in this situation, countries with fiscal imbalances are urged to make further progress with structural consolidation, in line with the requirements of the stability and growth pact. at the current juncture, particularly prudent and stability - oriented fiscal policies would also contribute to containing inflationary pressures. turning to structural reforms, we welcome the launch of the 2008 - 10 cycle of the renewed lisbon strategy for growth and jobs by the european council. the favourable labour market trends in the euro area suggest that economic reforms are paying off. however, many challenges remain as overall employment is still below the lisbon target of 70 % and unemployment is still unacceptably high. moreover, productivity growth remains weak, constraining general income growth. therefore, we strongly encourage euro area countries to increase reform efforts, in particular to foster market integration and to reduce rigidities in

. 4 %, quarter on quarter, in the fourth quarter of 2016, following a similar pace of growth in the third quarter. incoming data, notably survey results, increase our confidence that the ongoing economic expansion will continue to firm and broaden. the passthrough of our monetary policy measures is supporting domestic demand and facilitates the ongoing deleveraging process. the recovery in investment continues to be promoted by very favourable financing conditions and improvements in corporate profitability. moreover, rising employment, which is also benefiting from past structural reforms, is having a positive impact on households ’ real disposable income, thereby providing support for private consumption. also, there are signs of a somewhat stronger global recovery and increasing global trade. however, economic growth in the euro area is expected to be dampened by a sluggish pace of implementation of structural reforms and remaining balance sheet adjustment needs in a number of sectors. this assessment is broadly reflected in the march 2017 ecb staff macroeconomic projections for the euro area, which foresee annual real gdp increasing by 1. 8 % in 2017, by 1. 7 % in 2018 and by 1. 6 % in 2019. compared with the december 2016 eurosystem staff macroeconomic projections, the outlook for real gdp growth has been revised upwards slightly in 2017 and 2018. 1 / 2 bis central bankers'speeches the risks surrounding the euro area growth outlook have become less pronounced, but remain tilted to the downside and relate predominantly to global factors. according to eurostat ’ s flash estimate, euro area annual hicp inflation increased further to 2. 0 % in february, up from 1. 8 % in january 2017 and 1. 1 % in december 2016. this reflected mainly a strong increase in annual energy and unprocessed food price inflation, with no signs yet of a convincing upward trend in underlying inflation. headline inflation is likely to remain at levels close to 2 % in the coming months, largely reflecting movements in the annual rate of change of energy prices. measures of underlying inflation, however, have remained low and are expected to rise only gradually over the medium term, supported by our monetary policy measures, the expected continuing economic recovery and the corresponding gradual absorption of slack. this pattern is also reflected in the march 2017 ecb staff macroeconomic projections for the euro area, which foresee annual hicp inflation at 1. 7 % in 2017, 1. 6 % in 2018 and 1. 7 % in 2019. by comparison with the december 2016 eurosyst