The risks relating to high household indebtedness are realised when indebted households respond to the threat of payment difficulties by sharply reducing their consumption.

Euro area inflation remains subdued, but confidence in inflation converging towards the ECB's objective has strengthened. Owing to these uncertainties, the conduct of monetary policy in the euro area rests on patience, persistence and prudence.

In order to sustain economic growth and improve the employment situation over the long term, it is vital that Finland’s cost-competitiveness continue its favourable trajectory into the coming years. Meanwhile, the situation in the public finances can be eased by implementing structural reforms.

The amount of underutilized domestic capacity is expected to gradually be taken up, and the global economy's generally favourable outlook will support growth in the euro area. Together these factors support expectations that the inflation rate will slowly return to the policy objective.

The faster growth will ameliorate the problems in the economy, but not solve them. The industrial base has narrowed, unemployment is high and the public finances are in deficit. It is important to continue the corrective measures in the economy.

Structural changes in the banking sector may have an impact on risk spillovers between the Nordic countries.

A very substantial degree of monetary accommodation is still needed in the euro area for underlying inflation pressures to build up and support inflation in the medium term. More Bank of Finland Bulletin articles will be published in the beginning of April.

After a prolonged period of weakness, the Finnish economy has begun to recover. When the economy develops the capacity to renew itself in such a way that productivity improves and employment opportunities are generated, the growth outlook will improve. At the same time the risk of increasing marginalisation and lack of opportunities will be reduced.

Thanks to the Eurosystem’s comprehensive monetary policy measures, monetary conditions in the euro area are favourable. GDP is expected to grow at a reasonable pace in the immediate years ahead, and the pace of inflation is expected to gradually accelerate.

The growth in private demand that has bolstered the economy has been accompanied by continued growth in the levels of household debt. Risks relating to this can be controlled centrally using macroprudential policy.

Euro area monetary policy and domestic economic policy are supporting Finland’s slowly recovering economy. Close monitoring is nevertheless essential to ensure continued stability on the financial markets.

The ECB Governing Council decided in March 2016 on a package of measures to achieve the price stability objective. The monetary policy measures and forward guidance together provide a comprehensive package.

Resolving the protracted problems in the Finnish economy requires action in three areas. It is necessary to improve cost-competitiveness, continue structural reforms and end growth in the public debt.

A slower recovery in the euro area would present new challenges for monetary policy. The ECB Governing Council monitors all incoming information. The asset purchase programme provides sufficient flexibility in terms of adjusting the size and duration of the programme. The package of articles on monetary policy and the international economic forecast will be published in English on 2 October 2015.

The depth of the problems facing the Finnish economy is widely understood. It is now time to set ambitious objectives and proceed to solutions.

The build-up of housing debt, concentration in the banking system and an environment of low interest rates over an extended period of time expose the economy and the financial system to problems.