preliminary flash estimate. it is set to remain weak in the near term. surveys indicate that manufacturing 1 / 4 bis - central bankers'speeches continues to contract while services activity is expanding. consumer confidence is fragile, and households have not yet drawn sufficient encouragement from rising real incomes to significantly increase their spending. nevertheless, the conditions for a recovery remain in place. while the labour market has softened over recent months it continues to be robust, with the unemployment rate staying low, at 6. 3 per cent in december. a solid job market and higher incomes should strengthen consumer confidence and allow spending to rise. more affordable credit should also boost consumption and investment over time. provided trade tensions do not escalate, exports should support the recovery as global demand rises. fiscal and structural policies should make the economy more productive, competitive and resilient. we welcome the european commission's competitiveness compass, which provides a concrete roadmap for action. it is crucial to follow up, with further concrete and ambitious structural policies, on mario draghi's proposals for enhancing european competitiveness and on enrico letta's proposals for empowering the single market. governments should implement their commitments under the eu's economic governance framework fully and without delay. this will help bring down budget deficits and debt ratios on a sustained basis, while prioritising growth - enhancing reforms and investment. inflation annual inflation increased to 2. 4 per cent in december, up from 2. 2 per cent in november. as in the previous two months, the increase was expected and primarily reflected past sharp drops in energy prices falling out of the calculation. along with a month - on - month increase in december, this led energy prices slightly higher on an annual basis, after four consecutive declines. food price inflation edged down to 2. 6 per cent and goods inflation to 0. 5 per cent. services inflation edged up to 4. 0 per cent. most underlying inflation indicators have been developing in line with a sustained return of inflation to our medium - term target. domestic inflation, which closely tracks services inflation, has remained high, as wages and some services prices are still adjusting to the past inflation surge with a substantial delay. at the same time, recent signals point to continued moderation in wage pressures and to the buffering role of profits. we expect inflation to fluctuate around its current level in the near term. it should then settle sustainably at around the two per cent medium - term target. easing labour cost pressures and

with an annual growth rate of 1. 1 per cent. credit standards for business loans tightened again in the fourth quarter of 2024, having broadly stabilised over the previous four quarters, as reported in our latest bank lending survey. the renewed tightening mainly reflected banks becoming more concerned about the risks faced by their customers and less willing to take on risks themselves. demand for loans by firms increased slightly in the fourth quarter but remained weak overall. credit standards for mortgages were broadly unchanged, after three quarters of easing, while the demand for mortgages again increased strongly, mainly because of more attractive interest rates. conclusion the governing council today decided to lower the three key ecb interest rates by 25 basis points. in particular, the decision to lower the deposit facility rate – the rate through which we steer the monetary policy stance – is based on our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission. we are determined to ensure that inflation stabilises sustainably at our two per cent medium - term target. we will follow a datadependent and meeting - by - meeting approach to determining the appropriate monetary 3 / 4 bis - central bankers'speeches policy stance. in particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. we are not pre - committing to a particular rate path. in any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation stabilises sustainably at our medium - term target and to preserve the smooth functioning of monetary policy transmission. we are now ready to take your questions. 4 / 4 bis - central bankers'speeches