after a gradual winding - down of our net asset purchases. accordingly, at its last monetary policy meeting the governing council confirmed that it continues to expect the key ecb interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. the governing council also decided to reduce the monthly pace of the net purchases under the asset purchase programme ( app ) to €15 billion from october until the end of december 2018 and anticipated that, subject to incoming data confirming our medium - term inflation outlook, net purchases will then end. finally, the governing council also confirmed its intention to reinvest the principal payments from maturing securities purchased under the app for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. significant monetary policy stimulus is still needed to support the further build - up of domestic price pressures and headline inflation developments over the medium term. this support will continue to be provided by the net asset purchases until the end of the year, by the sizeable stock of acquired assets and the associated reinvestments, and by our enhanced forward guidance on the key ecb interest rates. in any event, the governing council stands ready to 1 / 3 bis central bankers'speeches adjust all of its instruments as appropriate to ensure that inflation continues to move towards the governing council ’ s inflation aim in a sustained manner. the financial health of the euro area banking sector has continued to improve. although showing a slight decrease from 14. 6 % at the end of 2017, the aggregate common equity tier 1 ratio of euro area significant institutions stood at 14. 1 % at the end of the first quarter of 2018. banks have made progress in reducing their stocks of non - performing loans ( npls ). in the first quarter of 2018, the npl ratio for euro area significant institutions dropped further, to 4. 8 %, compared with 5. 9 % a year earlier. however, euro area banks ’ profitability remains subdued. the average return on equity of euro area significant institutions declined to 6. 6 % in the first quarter of 2018, from 7. 1 % a year earlier. in this context, eu and national authorities are still following up on a comprehensive action plan for dealing with legacy asset quality issues

by implication, the quality of the information derived from the existing body of monetary statistics. nonetheless, three points can and should be made on the basis of our experience since last august : first, the close analysis of the monetary data derived from the mfi balance sheet has proved crucial in understanding the nature of the turmoil and the challenges it poses for monetary policy. it has both served to maintain a focus on the longer - term inflationary trends that are fundamental to effective monetary policy making, while also deepening our understanding of financial conditions and their cyclical implications. second, the turmoil has identified a number of lacunae in the statistical basis for the analysis – for example, regarding the extent of credit risk transfer from bank balance sheets – that need to be addressed. third, from the outset of monetary union, the ecb has maintained both the necessary staff expertise and the required statistical base for a thorough monetary analysis. maintaining such continuity is required if the monetary analysis is to be insightful when – as is certainly the case now – monetary and financial factors are at the heart of the policy discussion. these are important lessons to be drawn from the ecb experience. concluding remarks sceptics have often questioned the information content of monetary data and thus criticised the role played by monetary analysis in the ecb ’ s monetary policy strategy. often such critiques are based on only a casual knowledge of the euro area data. based on the ecb experience, the ability to extract policy - relevant information from the monetary data depends on two elements : first, high quality data must be available. second, high quality analysis of the data is required on an ongoing basis. it is apparent that a self - reinforcing virtuous cycle can be created, whereby better data serve better analysis, which in turn identifies necessary improvements to the data. the continuous nature of the process underpinning this virtuous cycle is crucial : once halted, even a successful monetary analysis may prove hard to restart. maintaining continuous improvement in the data and the analysis is central to our agenda to “ enhance the monetary analysis ”. by the same token, the potential for a destructive vicious cycle also exists. poor quality data breeds poor analysis. attempts to improve monetary statistics thus yield lower returns, and investment in such improvements diminishes. the resulting deterioration in the quality of the data in turn leads to a further deterioration in the impact of the analysis, thereby feeding the vicious spiral. based on the anglo - saxon experience with financial innovation, many