financing conditions at longer maturities. indeed, asset purchases – by compressing longer - term bond yields – can induce an easing of financial conditions that can partly compensate for the diminishing scope for conventional rate cuts. we also launched a series of targeted longer - term refinancing operations ( tltros ) to strengthen the pass - through of these measures via banks to the real economy. the effect on both financial conditions and the real economy was significant. considering all the measures taken since mid - 2014, the overall impact on euro area real gdp growth is estimated to have been between 2. 5 and 3 percentage points cumulatively until 2019, and the impact on inflation is estimated to have been between 1. 7 and 2 percentage points cumulatively over the same period. the response to the pandemic has provided further evidence of effectiveness. our pandemic emergency purchase programme ( pepp ) and the new series of tltros have proven to be powerful tools for stabilising financing conditions and stimulating credit growth. [ 17 ] according to ecb staff estimates, the measures we have taken since march this year will increase inflation by around 0. 8 percentage points cumulatively between 2020 and 2022, and gdp growth by around 1. 3 percentage points. however, we have to reflect on what will happen if natural rates remain low and inflation stays subdued – meaning central banks have to continue to resort frequently to balance sheet policies to deliver on their mandates. this scenario throws up two issues that we need to consider more deeply. the first is what should be the standardised toolkit for a world where unconventional policy is “ normal ”. the implicit assumption since 2008 has been that policy “ normalisation ” will mean returning mainly to interest rate policy and winding down unconventional policies. but if “ normal ” is closer to what we saw before the outbreak of the pandemic and, i am afraid, what we are seeing even more vividly now, we need to be prepared. we need to have a clear consensus – agreed within the governing council and understood by the public – on what tools are available to us when inflation is too low, and how they should be systematically deployed in response to different types of shock. so we need to further our understanding of the transmission channels of our different instruments, and to evaluate their relative side effects, both intended and unintended, as they work their way through the economy. a central question is the extent to which different tools are substitutes or complements and their potential

quarter of 2017. growth in 2017 marked the eighth successive year of positive growth in the united states, compared with four consecutive years of positive growth in the euro area. looking ahead, growth in the united states is expected to accelerate on the back of solid growth in investment and consumption and significant fiscal stimulus. at the same time, we have to keep an eye on a gradual increase in long - term interest rates in the united states, given the robust economic growth, an expansive deficit funded fiscal policy, and the federal reserve ’ s exit from the securities markets. this ongoing broad - based economic growth is largely echoed in the june 2018 eurosystem staff 1 / 2 bis central bankers'speeches macroeconomic projections for the euro area. real gdp is projected to increase by 2. 1 % in 2018, 1. 9 % in 2019 and 1. 7 % in 2020. while risks to growth remain broadly balanced, those related to global factors, including the threat of increased protectionism have become more prominent. moreover, the risk of persistently high financial market volatility warrants monitoring. turning to the nominal side, euro area annual inflation, as measured by the harmonised index of consumer prices ( hicp ), increased to an estimated 2 % in june, from 1. 9 % in may. on the basis of current futures prices for oil, headline inflation is expected to remain around the current level for the remainder of the year. measures of underlying inflation remain generally muted, but are higher than the low range that prevailed between mid - 2014 and mid - 2016. developments in domestic pipeline inflation and wages suggest strengthening price pressures. a continued strengthening in domestic cost pressures is expected to be the main driver behind the expected pick - up in underlying inflation towards the end of this year and the further gradual increase over the medium term. this assessment of inflation is broadly in line with the june 2018 eurosystem staff macroeconomic projections for the euro area, which project annual hicp inflation of 1. 7 % in 2018, 2019 and 2020. this outlook depends on keeping the ample degree of monetary policy stimulus in place, as this remains necessary for underlying inflation pressures to continue to build up and be maintained over the medium term. in october 2017, the ecb governing council announced the reduction of its asset purchase programme by half, having announced in december 2016 that it would be scaled back from €80 billion to €60 billion. we gave up our easing bias in the spring and at the june meeting the governing council concluded that