Vulnerabilities in euro area financial markets were shown up by recent stress in the banking sector in other regions, which led to market reactions here too, although such spillovers were mitigated by solid euro area bank fundamentals. These tensions were short-lived, however, owing to prompt interventions by the authorities in the United States and Switzerland.
Financing conditions for the economy have remained favourable. While market interest rates have increased since December, bank funding costs have so far remained contained. Bank lending rates to firms and households continue to stand at historically low levels. Turning to the risk assessment, we continue to see the risks to the economic outlook as broadly balanced over the medium term.