in particular, the technical assumptions for short - term interest rates are taken from market expectations as at mid - february. moreover, it should be noted that the projections are based on the assumptions that the recent dynamism in commodity prices will diminish over the projection horizon, in line with futures prices, and that pressure from labour costs and profit margins will be limited. in the view of the governing council, the risks to the outlook for inflation over the medium term are on the upside. these risks include further rises in oil and agricultural prices, continuing the strong upward trend observed in recent months. furthermore, they include the possibility that stronger than currently expected wage growth may emerge, taking into account high capacity utilisation and tight labour market conditions. moreover, the pricing power of firms, notably in market segments with low competition, could be stronger than expected. increases in administered prices and indirect taxes beyond those foreseen thus far also pose upside risks to the inflation outlook. at this juncture, it is imperative that all parties concerned meet their responsibilities and that second - round effects on price - setting, on the one hand, and on wages, on the other hand, stemming from current inflation rates be avoided. in the view of the governing council, this is of key importance in order to preserve price stability in the medium term and thereby the purchasing power of all euro area citizens. the governing council is monitoring wage negotiations in the euro area with particular attention. in this context, the governing council is concerned about the existence of schemes in which nominal wages are indexed to consumer prices. such schemes involve the risk of upward shocks in inflation leading to a wage - price spiral, which would be detrimental to employment and competitiveness in the countries concerned. the governing council therefore calls for such schemes to be avoided. the monetary analysis confirms the prevailing upside risks to price stability at medium to longer - term horizons. annual m3 growth remained very vigorous at 11. 5 % in january, supported by the continued strong growth of mfi loans to the private sector. a number of temporary factors suggest that m3 growth currently overstates the pace of the underlying monetary expansion. the relatively flat yield curve in particular has made holding monetary assets more attractive. however, even after taking such effects into account, a broad - based assessment of the latest data confirms that the underlying rate of money and credit growth remains strong. the growth of household borrowing has moderated over recent months, reflecting the impact of higher key ecb interest rates since december 2005

operation of automatic stabilisers and contribute to the smooth functioning of economic and monetary union. structural reforms would not only be beneficial for employment and potential growth, but would also help to reduce inflationary pressures. enhancing competition, especially in services and network industries, is essential at this juncture to support price stability and enhance productivity growth. similarly, administered prices, indirect taxes, minimum wage legislation and public sector wage - setting should not add to inflationary pressures in the economy. we are now at your disposal for questions.