while this marks the highest level recorded in almost two years, it remains far below the ecb ’ s objective. and while we expect headline inflation to continue rising over the coming months, much of this increase will be driven by statistical factors related to the mechanical unwinding of the extreme oil price declines a year ago. we do not yet see a consistent strengthening of underlying price dynamics. our objective is – and will remain – a rate of inflation below, but close to, 2 % over the medium term. going forward, our assessment will depend on whether we see a sustained adjustment in the path of inflation towards that objective. and that means that inflation convergence towards 2 % is durable, even with a reduction in monetary accommodation. inflation dynamics, in other words, need to be self - sustained. 3 / 4 bis central bankers'speeches and this brings me to the third factor which calls for prudence over the outlook : the fact that the euro area recovery still relies to a considerable degree on accommodative monetary policy. the recovery in credit is being facilitated by a more resilient banking sector, but the impetus comes from our monetary policy. our measures and their effective transmission underpin our outlook for growth and inflation. according to staff estimates, our measures will raise the inflation rate by more than half a percentage point, on average, over 2016 and 2017. and they will contribute to increasing real euro area gdp growth by more than one and a half percentage points cumulatively between 2015 and 2018. in other words, monetary policy remains a key ingredient in the reflation scenario we foresee for the euro area in the coming years. conclusion so even if there are many encouraging trends in the euro area economy, the recovery remains highly reliant on a constellation of financing conditions that, in turn, depend on continued monetary support. the ecb will continue to act, as warranted, by using all the instruments available within our mandate to secure a sustained convergence of inflation towards a level below, but close to 2 %. we also have to recognise that we operate under a still significant degree of uncertainty. whether the economic recovery becomes more solid, and how quickly inflation dynamics become more self - sustained, depends not just on the current monetary policy stance, but also on other policies, as i have discussed on several other occasions. restoring a sense of direction – and therefore confidence – would be the simplest and yet most powerful way to deliver economic stimulus. 1 for further detail, see ecb economic bulletin

speech the ecb ’ s monetary policy response to the pandemic : liquidity, stabilisation and supporting the recovery speech by philip r. lane, member of the executive board of the ecb, at the financial center breakfast webinar organised by frankfurt main finance 24 june 2020 today, i will discuss the impact of the monetary policy measures taken by the ecb in response to the pandemic emergency on euro area financial conditions and the outlook for growth and inflation. [ 1 ] as i will explain, our measures have been an effective and efficient reaction to the covid - 19 crisis by boosting liquidity, stabilising financial markets and supporting the recovery. let me briefly recall the unprecedented challenges that warranted a decisive monetary policy response. the european and world economies are experiencing an extraordinary and severe contraction. the measures taken to contain the spread of the coronavirus since early march have interrupted many economic activities worldwide. large - scale job and income losses, along with an exceptional degree of uncertainty about the economic outlook, have led to a significant drop in consumer spending and business investment. as the containment measures are lifted, we see some signs of an initial recovery. however, this process is expected to be quite gradual, since it will take time for consumers and businesses to recover from this shock. income losses and precautionary savings continue to weigh on consumption. likewise, weak demand, continued supply constraints and ongoing social - distancing restrictions are hampering the normalisation of economic activity. these developments are clear from the incoming data and shaped the euroystem staff macroeconomic projections published in early june. euro area output contracted by a record 3. 6 percent in the first quarter of the year and is projected to decline by a further 13 percent in the second quarter. while growth will partially rebound in the second half of this year, output is projected to return to the level prevailing at the end of 2019 only at the end of 2022 ( chart 1 ). the net impact of the covid - 19 shock on the medium - term inflation outlook is expected to be disinflationary to a substantial degree, since the forces associated with greater economic slack are likely to outweigh any inflationary pressures stemming from damage to supply capacity. [ 3 ] the sharp drop in economic activity ( together with the fall in oil prices ) has already left its mark on euro area inflation, which has decreased significantly over the past months, standing at only 0. 1 percent in may.