retain earnings, to turn to the market to strengthen further their capital bases or to take full advantage of government support measures for recapitalisation. to sum up, the current key ecb interest rates still remain appropriate. we therefore decided to leave them unchanged. taking into account all the new information and analyses which have become available since our meeting on 2 december 2010, we see evidence of short2 bis central bankers ’ speeches term upward pressure on overall inflation, mainly owing to energy prices, but this has not so far affected our assessment that price developments will remain in line with price stability over the policy - relevant horizon. at the same time, very close monitoring is warranted. recent economic data are consistent with a positive underlying momentum of economic activity, while uncertainty remains elevated. a cross - check of the outcome of our economic analysis with that of the monetary analysis indicates that inflationary pressures over the medium term should remain contained. overall, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. the firm anchoring of inflation expectations is of the essence. turning to fiscal policies, in view of the ongoing vulnerability to adverse market reactions, countries need to do their utmost to meet their deficit targets and put government debt - togdp ratios firmly on a downward trajectory. in this regard, the governing council takes note of the recently announced measures in some euro area countries to reduce their very large fiscal imbalances. where necessary, additional corrective measures – preferably on the expenditure side – need to be swiftly defined and implemented. at the same time, all euro area countries should pursue ambitious and credible multi - year consolidation strategies. this will help to strengthen confidence in the sustainability of public finances, reduce risk premia in interest rates and improve the conditions for sound and sustainable growth. any positive fiscal developments that may emerge, reflecting factors such as a more favourable than expected economic environment, should be exploited to make faster progress with fiscal consolidation. substantial and far - reaching structural reforms, complementing fiscal adjustment, should be rapidly implemented to enhance the prospects for higher sustainable growth. major reforms are particularly necessary in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. the removal of labour market rigidities would further support the adjustment process of these economies. increasing product market competition

already last year, the recovery is likely to be uneven across regions and sections and over time. high uncertainty continues to prevail. as regards price developments, we have continued to witness low inflation and low inflationary pressures over the recent months. inflation in february 2010 stood at 0. 9 %. the outlook for inflation remains in line with price stability and risks to this outlook remain broadly balanced. specifically, we expect inflation to stay around 1 % in the near term, and to remain moderate over the policy - relevant horizon, in line with a relatively slow recovery in demand. our monetary analysis continues to confirm the expectation of low inflationary pressures over the medium term, as reflected in weak expansion of money and credit. the growth of loans to enterprises in particular is anticipated to remain weak for some time ahead, while the annual growth rate of loans to households is positive and strengthening. these developments are still in line with regularities over past business cycles. we will monitor credit developments very closely in the months to come. while there is no clear evidence of credit constraints in the euro area as a whole, the situation differs across countries, sectors and company sizes. to a large extent, the weak growth of loans is due to the unprecedented severance of the 2009 recession. indicators of inflation expectations over the medium to longer term remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. it is against this background that the governing council kept the level of key ecb interest rates unchanged earlier this month, regarding the current level as appropriate. the significant monetary impulse stemming from our interest rate reductions last year has spread to market interest rates, and the transmission to rates charged by banks to households and corporations has continued to perform well. this transmission needs to be seen in conjunction with the non - standard measures that the ecb has taken. these measures, notably the provision of full allotment of liquidity to banks with a one - year maturity against collateral, have been effective in providing funding to banks at favourable conditions, stabilising the money market, and fostering the pass - through of our interest rate reductions. phasing out from non - standard measures in line with the above economic and monetary assessment, the governing council decided earlier this month to continue the gradual phasing out of some of the extraordinary measures. we do not wish to breed dependency. banks are to take up their intermediation again and should have all appropriate incentives to do so