by denting confidence, uncertainty might affect real economic variables, such as capital goods production, which declined strongly last quarter, possibly as a result of this reduced confidence. all these elements indicate that the moderation in the pace of the euro area economic expansion will likely extend into the current year. this is also reflected in our staff macroeconomic projections. in fact, growth for this year has been revised downwards to 1. 1 %, which is 0. 6 % lower than anticipated in the december forecast. the fundamental factors supporting the euro area expansion remain broadly in place, however. looking ahead, the effects of the idiosyncratic factors currently weighing on economic growth are expected to unwind, albeit at a slower pace than initially foreseen. for instance, recent data on motor vehicle production show signs of normalisation, and consumer confidence recently edged up again. beyond more temporary fluctuations, the euro area expansion will continue to be supported 1 / 3 bis central bankers'speeches by favourable financing conditions, further gains in employment and rising wages. also, the ongoing yet somewhat more modest expansion in global activity should continue to support euro area growth. in fact, bank lending rates to euro area firms and households remain close to their historical lows. the euro area unemployment rate currently stands at its lowest level in more than a decade, and the wage increases that result from tightening labour markets should continue to underpin household income and private consumption. on the external side, preliminary estimates for the fourth quarter of 2018 point to a pickup in net exports after a very weak third quarter. for these reasons, gdp growth in the euro area is expected to remain sound in the medium term. accordingly, our staff projections expect euro area gdp growth to reach 1. 6 % in 2020 and 1. 5 % in 2021, which is largely unchanged from the december forecast round. the risks surrounding euro area growth are still considered to be tilted to the downside, on account of the persistence of the uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets. turning to inflation, hicp inflation increased to 1. 5 % in february, from 1. 4 % in january ( according to preliminary estimates ). this slight increase was mostly driven by higher energy and food price inflation, while measures of underlying inflation remain generally muted. headline inflation is likely to remain around current levels in the coming months, before declining towards the end of year on the basis of the financial market ’ s outlook for

to restore the sustainability of the public finances, which were weakened by the bis central bankers ’ speeches deep recession. as regards this process, it is not at the end yet. the process is not even at the beginning of the end. but perhaps it is at end of the beginning ( churchill ). what can we do in our own countries? we manage to navigate through unchartered waters by simply keeping our house in order ; taking care of the competitiveness of our economies, not letting public finances deteriorate too much and by investing for the future. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches