on 5 may 2011 confirms continued upward pressure on overall inflation, mainly owing to energy and commodity prices. a cross - check of the outcome of the economic analysis with that of the monetary analysis indicates that the underlying pace of monetary expansion is gradually recovering. monetary liquidity remains ample, with the potential to accommodate price pressures in the euro area. furthermore, the most recent data confirm the positive underlying momentum of economic activity in the euro area, while uncertainty remains elevated. overall, our monetary policy stance remains accommodative, lending support to economic activity. on balance, risks to the outlook for price stability are on the upside. accordingly, strong vigilance is warranted. on the basis of our assessment, we will act in a firm and timely manner. we will do all that is needed to prevent recent price developments giving rise to broad - based inflationary pressures. we remain strongly determined to secure a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. this is a prerequisite for monetary policy to make an ongoing contribution towards supporting growth and job creation in the euro area. turning to fiscal policies, all parties involved in the preparation of the 2012 national budgets must ensure that they are fully in line with the requirement to support confidence in fiscal policies. a comparison between the latest economic forecasts by the european commission and the fiscal plans embodied in the stability programmes points to the need for many countries to underpin their budget targets with concrete consolidation measures in order to correct their excessive deficits by the commonly agreed deadlines. the implementation of credible fiscal adjustment strategies is crucial in view of ongoing financial market pressures. at the same time, the implementation of ambitious and far - reaching structural reforms is urgently required in the euro area to strengthen substantially its competitiveness, flexibility and longer - term growth potential. in particular, countries which have high fiscal and external deficits or which are suffering from a loss of competitiveness should rapidly carry out comprehensive economic reforms. in the case of product markets, policies that enhance competition and innovation should be vigorously pursued to facilitate productivity growth. regarding the labour market, the priority must be to enhance wage flexibility and incentives to work, and to remove labour market rigidities. we are now at your disposal for questions. bis central bankers ’ speeches

longer - term refinancing operations ( ltros ) to be allotted on 27 july, 31 august and 28 september 2011 as fixed rate tender procedures with full allotment. the rates in these three - month operations will be fixed at the average rate of the mros over the life of the respective ltro. as stated on previous occasions, the provision of liquidity and the allotment modes for refinancing operations will be adjusted when appropriate, taking into account the fact that all the non - standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature. let me now explain our assessment in greater detail, starting with the economic analysis. in the first quarter of 2011, the euro area recorded strong real gdp growth of 0. 8 % quarteron - quarter, following the 0. 3 % increase of the fourth quarter of 2010. recent statistical releases and survey - based indicators point towards a continued expansion of economic activity in the euro area in the second quarter of this year, albeit at a slower pace. this easing reflects the fact that the strong growth in the first quarter was partly due to special factors, which will cease to play a role in the second quarter. hence, it is appropriate to look through such short - term volatility and to emphasise the positive underlying momentum of economic activity in the euro area. looking ahead, euro area exports should be supported by the ongoing expansion in the world economy. at the same time, taking into account the bis central bankers ’ speeches favourable level of business confidence in the euro area, private sector domestic demand should contribute increasingly to economic growth, benefiting from the still accommodative monetary policy stance and the measures adopted to improve the functioning of the financial system. however, activity is expected to continue to be dampened somewhat by the process of balance sheet adjustment in various sectors. this assessment is also reflected in the june 2011 eurosystem staff macroeconomic projections for the euro area, which foresee annual real gdp growth in a range between 1. 5 % and 2. 3 % in 2011 and between 0. 6 % and 2. 8 % in 2012. compared with the march 2011 ecb staff macroeconomic projections, the range for 2011 has been revised upwards, while the range for 2012 remains broadly unchanged. the june 2011 eurosystem staff projections are broadly in line with recent forecasts by international organisations. in the governing council ’ s assessment, the risks to this economic outlook remain broadly