impact of derecognition of loans from bank balance sheets, the growth in loans to non - financial corporations continued to strengthen, further confirming that a turning point was reached earlier in 2010. over the past few months, banks have generally stabilised the size of their balance sheets while expanding the provision of credit to the private sector. however, the challenge remains to expand the availability of such credit when demand picks up further. to address this challenge, where necessary, it is essential for banks to 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 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 4 november 2010, we continue to expect price developments to remain moderate over the policy - relevant medium - term horizon. recent economic data are consistent with a positive underlying momentum of the recovery, while uncertainty is elevated. a cross - check of the outcome of our economic analysis with that of the monetary analysis confirms that inflationary pressures over the medium term remain contained. we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. inflation expectations are 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, while budgetary developments for some euro area countries are more favourable than expected, concerns about unsustainable fiscal positions and their vulnerability to adverse market reactions remain very high for others and have had repercussions throughout the euro area. in this environment, there is a clear need for the responsible authorities to strengthen confidence in sound public finances, thereby reducing risk premia in interest rates and supporting sustainable growth over the medium term. at the same time, all euro area countries should pursue ambitious and credible multi - year consolidation strategies and implement fully the planned corrective measures, focusing on the expenditure side. in their 2011 budgets, countries need to specify the necessary fiscal adjustment measures in detail, while standing ready to correct any slippages from the fiscal objectives announced. substantial and far - reaching structural reforms 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, particularly in the services sectors, would also facilitate the restructuring of the economy and encourage innovation and the adoption of new technologies. such measures are crucial for enhancing productivity growth, one of the main drivers of long - term growth. all these structural reforms should be supported by an appropriate restructuring of the banking sector. sound balance sheets, effective risk management and transparent, robust business models remain key to strengthening banks ’ resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability. finally, let me recall that the governing council welcomes the economic and financial adjustment programme which was agreed by the irish government following the successful conclusion of the negotiations with the european commission, in liaison with the ecb, and the international monetary fund. the programme contains the necessary elements to bring about a sustainable stabilisation of the irish economy. it addresses in a decisive manner the economic and financial causes underlying current market concerns and will thereby contribute to restoring confidence and safeguarding financial stability in the euro area. the governing council welcomes the commitment of the irish public authorities to take any further measures that may become appropriate to achieve the objectives of the programme.