The course of monetary policy in the euro area reflects these arguments. Between 2001 and 2003, strong M3 growth was accounted for largely by portfolio shifts. Underlying trend monetary expansion was deemed more modest than reflected in headline M3 dynamics. Thus the monetary analysis did not constitute an impediment to interest rate cuts in that period.
Secondly, given the extent of the disruption to normal market functioning internationally in recent months, it is inevitable that Irish banks – like all banks – would experience some impairment in their access to liquidity in the interbank market.