are on track. in other words, the responsibility for ensuring the conditions for the eurosystem to support the banking system of the countries under stress is with the authorities of the countries themselves. there should be no doubt about it. for further details, see trichet, j - c. ( 2009 ). “ the ecb ’ s enhanced credit support ”, address at the university of munich, http : / / www. ecb. europa. eu / press / key / date / 2009 / html / sp090713. en. html. bis central bankers ’ speeches the support provided to the banking system has been substantial. it is reflected in financing conditions at the euro area level, which have become more favourable of late, amid an ongoing gradual normalisation. recent euro area bank lending surveys show signs of improvement in credit conditions compared with the peaks recorded during the apex of the financial crisis. while in most euro area member states we have seen broadly unchanged or slightly loosened credit standards over the past few quarters, in a few others the bank lending surveys point to constraints remaining in the supply of bank loans to firms and households. on the basis of these and other data, recent analyses by ecb staff members suggest that the transmission mechanism of monetary policy is normalising. 6 the impact of a monetary policy tightening on economic activity – at almost all horizons – is currently not statistically different from pre - crisis regularities. the impact on inflation shows a similar pattern in terms of time variation. 7 in sum, the monetary policy framework of the ecb allows policy rates to be changed according to macroeconomic and price developments area - wide, while its non - standard measures aim to maintain monetary policy transmission so as to make the stance of policy rates effective throughout the euro area. the standard and non - standard measures thus complement one another. the standard monetary policy instrument has been used to pursue the ecb ’ s primary objective of price stability in the euro area as a whole. the non - standard measures have addressed the impediments to monetary policy transmission stemming from financial market dislocations and related threats to financial stability, and have thus helped to avoid cross - country divergence arising from discrepancies in the national transmission of the common monetary policy. these measures have maintained the effectiveness of the single monetary policy in challenging circumstances. during the crisis, the credibility of the ecb has been instrumental in ensuring that medium - term inflation expectations have remained well - anchored around price stability. this

, if the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and / or duration. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp increased by 0. 3 %, quarter on quarter, in the third quarter of 2016, after recording a similar pace of growth in the second quarter. incoming data, notably survey results, point to somewhat stronger growth in the last quarter of 2016. looking ahead, we expect the economic expansion to firm further. the pass - through of our monetary policy measures is supporting domestic demand and facilitating the ongoing deleveraging process. the very favourable financing conditions and improvements in corporate profitability continue to promote the recovery in investment. moreover, sustained employment gains, which are also benefiting from past structural reforms, provide support for private consumption via increases in households ’ real disposable income. at the same time, there are signs of a somewhat stronger global recovery. however, economic growth in the euro area is expected to be dampened by a sluggish pace of implementation of structural reforms and remaining balance sheet adjustments in a number of sectors. the risks surrounding the euro area growth outlook remain tilted to the downside and 1 / 2 bis central bankers'speeches relate predominantly to global factors. according to eurostat, euro area annual hicp inflation increased markedly from 0. 6 % in november 2016 to 1. 1 % in december. this reflected mainly a strong increase in annual energy inflation, while there are no signs yet of a convincing upward trend in underlying inflation. looking ahead, on the basis of current oil futures prices, headline inflation is likely to pick up further in the near term, largely reflecting movements in the annual rate of change of energy prices. however, measures of underlying inflation are expected to rise more gradually over the medium term, supported by our monetary policy measures, the expected economic recovery and the corresponding gradual absorption of slack. turning to the monetary analysis, broad money ( m3 ) continues to expand at a robust pace, with its annual rate of growth increasing to 4. 8 % in november 2016, up from 4. 4 % in october. as in previous months, annual growth in m3 was mainly supported by its most liquid components, with the narrow monetary aggregate m1 expanding at an annual rate of 8. 7 % in november, up from 8. 0 % in october. loan