firms and households remained solid, benefiting from the continued passthrough of our accommodative monetary policy stance to bank lending rates. the annual growth rate of loans to non - financial corporations increased to 4. 3 % in august, from 4. 0 % in july 2019, while the annual growth rate of loans to households remained unchanged at 3. 4 % in august. the euro area bank lending survey for the third quarter of 2019 indicates a slight easing of credit standards and increasing demand for loans to households, while demand for loans to firms remained broadly stable. our accommodative monetary policy stance will help to safeguard favourable bank lending conditions and will continue to support access to financing, in particular for small and medium - sized enterprises. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer - term growth potential, supporting aggregate demand at the current juncture and reducing vulnerabilities. the implementation of structural policies in euro area countries needs to be substantially stepped up to boost euro area productivity and growth potential, reduce structural unemployment and increase resilience. the 2019 country - specific recommendations should serve as the relevant signpost. regarding fiscal policies, the mildly expansionary euro area fiscal stance is currently providing some support to economic activity. in view of the weakening economic outlook and the continued prominence of downside risks, governments with fiscal space should act in an effective and timely manner. in countries where public debt is high, governments need to pursue prudent policies and meet structural balance targets, which will create the conditions for automatic stabilisers to operate freely. all countries should intensify their efforts to achieve a more growthfriendly composition of public finances. likewise, the transparent and consistent implementation of the european union ’ s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council welcomes the ongoing work and urges further specific and decisive steps to complete the banking union and the capital markets union. 2 / 3 bis central bankers'speeches we are now at your disposal for

comprehensive package of policy measures that we decided at our last meeting provides substantial monetary stimulus, which will contribute to a further easing in borrowing conditions for firms and households. this will support the euro area expansion, the ongoing buildup of domestic price pressures and, thus, the sustained convergence of inflation to our mediumterm inflation aim. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp growth was confirmed at 0. 2 %, quarter on quarter, in the second quarter of 2019, following a rise of 0. 4 % in the previous quarter. incoming economic data and survey information continue to point to moderate but positive growth in the second half of this year. this slowdown in growth mainly reflects the ongoing weakness of international trade in an environment of persistent global uncertainties, which continue to weigh on the euro area manufacturing sector and are dampening investment growth. at the same time, the services and construction sectors remain resilient, despite some moderation. the euro area expansion is supported by favourable financing conditions, further 1 / 3 bis central bankers'speeches employment gains in conjunction with rising wages, the mildly expansionary euro area fiscal stance and the ongoing – albeit somewhat slower – growth in global activity. the risks surrounding the euro area growth outlook remain on the downside. in particular, these risks pertain to the prolonged presence of uncertainties, related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets. euro area annual hicp inflation decreased from 1. 0 % in august 2019 to 0. 8 % in september, reflecting lower food and energy price inflation. on the basis of current futures prices for oil, headline inflation is likely to decline slightly further before rising again at the end of the year. measures of underlying inflation remained generally muted and indicators of inflation expectations stand at low levels. while labour cost pressures have strengthened amid tighter labour markets, the weaker growth momentum is delaying their pass - through to inflation. over the medium term inflation is expected to increase, supported by our monetary policy measures, the ongoing economic expansion and robust wage growth. turning to the monetary analysis, broad money ( m3 ) growth increased to 5. 7 % in august 2019, after 5. 1 % in july. sustained rates of broad money growth reflect ongoing bank credit creation for the private sector and low opportunity costs of holding m3. the narrow monetary aggregate m1 continues to be the main contributor to broad money growth on the components side. the growth of loans to