Further unanticipated increases in indirect taxes and administered prices could also have adverse effects on price developments. Moreover, continued strong monetary and credit growth stimulated by low interest rates in the euro area, together with the high level of excess liquidity, signal risks to price stability over the medium to longer term, as economic activity gains momentum and approaches its potential aggregate output level.
We must therefore continue to be vigilant with regard to the materialisation of these upside risks to price stability. There are two other important and more general issues that I would like to address with regard to the preservation of monetary stability.