, together with the gradual increase in employee compensation, supports households ’ disposable income and is underpinning solid consumption dynamics. buoyant sentiment, favourable bank lending conditions and the notable progress achieved with respect to deleveraging are all conducive to robust consumer spending. the investment outlook is also positive, supported not only by a need to modernise the capital stock after years of subdued investment and an improving outlook for profitability, but also by highly accommodative financing conditions as our policy measures have passed through financial markets to affect the borrowing conditions of businesses and their customers. since the announcement of our policy measures in june 2014, bank lending rates for euro area non - financial corporations have fallen by almost 120 basis points and those for households by 100 basis points. lending rates for very small loans, which can be taken as a proxy for loans to small and medium - sized enterprises ( smes ), have declined by almost 190 basis points. the significant improvement in funding conditions for smes is especially encouraging as they provide 1 / 3 bis central bankers'speeches two - thirds of total private sector employment in the euro area. heterogeneity of lending rates across countries has also fallen sharply. for example, the difference between the average lending rate for firms in countries that were severely affected by the crisis versus other countries has narrowed by around 100 basis points over this period. the pass - through of monetary policy has become more even. these positive developments have been further supported by the second series of targeted longer - term refinancing operations, as a result of which banks are passing on the favourable funding conditions to their customers. 2 the sharp reduction in bank lending rates has been accompanied by easier access to funding, as recent surveys have shown. 3 moreover, bank lending volumes have been gradually recovering since early 2014. according to the latest survey on the access to finance of enterprises, covering the period from october 2016 to march 2017, euro area smes have continued to signal improvements in the availability of bank loans. market - based funding conditions, too, have improved significantly in response to the corporate sector purchase programme launched in june 2016. against the backdrop of this substantial easing of financing conditions, domestic demand has become the mainstay of growth in the euro area, making the recovery more resilient to developments overseas. the latest ecb staff macroeconomic projections point to robust private consumption and a continued recovery in investment over the period ahead. real gdp growth is projected to remain well

above potential growth and to average between 1. 7 % and 2. 2 % in 2017, 2018 and 2019. the risks to the growth outlook are broadly balanced : on the upside, the current cyclical momentum could result in stronger than expected growth, while the remaining downside risks relate primarily to global factors and developments in the exchange rate. from today ’ s point of view, the strength and resilience of the recovery tends to foster our confidence that reflationary forces will gradually support a return of headline inflation towards a level that is below, but close to, 2 % over the medium term. but inflation dynamics remain subdued. after hovering at levels well below 1 % for three years, with occasional dips into negative territory, euro area headline inflation edged higher towards the end of last year and stood at 1. 5 % in september according to eurostat ’ s flash estimate. owing to energy - related base effects, headline inflation rates are likely to temporarily decline towards the turn of the year. looking further ahead, as reflected in the latest ecb staff projections, headline inflation is expected to remain notably below a level that is consistent with our inflation aim over the next two years, averaging 1. 5 % in 2019. furthermore, the recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium - term outlook for price stability. some measures of underlying inflation – which is more closely related to domestic price pressures – have ticked up moderately in recent months. for example, hicp inflation excluding food and energy had been stuck below 1 % for around three years, but was 1. 1 % in september. nevertheless, underlying inflation pressures are still too weak and have so far failed to show convincing signs of a sustained upward trend. an important element keeping underlying price pressures subdued is muted wage dynamics, which are shaped by many factors. in addition to weak productivity developments, the significant degree of remaining labour market slack is limiting wage growth. when assessing slack, it can prove useful to also look at broader measures than the unemployment rate. the so - called “ u6 measure ” captures unemployment, underemployment ( meaning workers who would like to work more hours ) and marginal attachment, namely those workers that are not competing very actively in the labour market, for example because they are not available to start a new job at short notice. this measure currently covers just below 18 % of the labour force and is thus considerably higher than the unemployment rate