a larger fall in energy prices and some weakening in services price inflation. on the basis of current futures prices for energy, annual inflation rates are expected to remain at low levels in the coming months. underlying price pressures in the euro area are expected to remain subdued over the medium term. at the same time, inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 %. such a constellation suggests that we may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below but close to 2 % later on. taking into account today ’ s decisions, the risks to the outlook for price developments are broadly balanced over the medium term. upside risks relate in particular to higher commodity prices as well as stronger than expected increases in administered prices and indirect taxes, and downside risks stem from weaker than expected economic activity. turning to the monetary analysis, data for september confirm the subdued underlying growth of broad money ( m3 ) and, in particular, credit. annual growth in m3 moderated to 2. 1 % in september, from 2. 3 % in august. annual growth in m1 remained strong at 6. 6 %, reflecting a preference for liquidity, although it was below the peak of 8. 7 % observed in april. net capital inflows into the euro area continued to be the main factor supporting annual m3 growth, while the annual rate of change of loans to the private sector remained weak. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) stood at 0. 3 % in september, broadly unchanged since the turn of the year. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) was – 2. 7 % in september, compared with – 2. 9 % in august. overall, weak loan dynamics for non - financial corporations continue to reflect primarily their lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non - financial sector balance sheets. at the same time, the october 2013 bank lending survey tentatively signals a stabilisation in credit conditions for firms and households, in the context of still weak loan demand. since the summer of 2012 substantial progress has been made in improving the funding situation of banks. in order to ensure an adequate transmission of monetary policy to the financing conditions in euro area countries, it is essential

period of 2015 on 7 july 2015. this procedure will also remain in use for the eurosystem ’ s special - term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed, and at least until the end of the second quarter of 2015. the fixed rate in these special - term refinancing operations will be the same as the mro rate prevailing at the time. furthermore, we decided to conduct the three - month longer - term refinancing operations ( ltros ) to be allotted until the end of the second quarter of 2015 as fixed rate tender procedures with full allotment. the rates in these three - month operations will be fixed at the average rate of the mros over the life of the respective ltro. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp in the euro area rose by 0. 3 %, quarter on quarter, in the second quarter of 2013, following six quarters of falling output. developments in survey - based confidence indicators up to october are consistent with continued, albeit modest, growth in the second half of the year. looking ahead, output is expected to continue to recover at a slow pace, in particular owing to a gradual improvement in domestic demand supported by the accommodative monetary policy stance. euro area economic activity should, in addition, benefit from a gradual strengthening of demand for exports. furthermore, the overall improvements in financial markets seen since last year appear to be gradually working their way through to the real economy, as should the progress made in fiscal consolidation. in addition, real incomes have benefited recently from generally lower energy price inflation. this being said, bis central bankers ’ speeches unemployment in the euro area remains high, and the necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity. the risks surrounding the economic outlook for the euro area continue to be on the downside. developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions. other downside risks include higher commodity prices, weaker than expected domestic demand and export growth, and slow or insufficient implementation of structural reforms in euro area countries. according to eurostat ’ s flash estimate, euro area annual hicp inflation decreased in october 2013 to 0. 7 %, from 1. 1 % in september. this decline was stronger than expected and reflected, in particular, lower food price inflation,