2 Again, any drop in the value of these financial assets would undermine the efforts aimed at creating wealth through such savings vehicles. Finally, rating downgrades cast general doubts on the long-term economic and financial health of a country. This is because downgrades typically weigh on business confidence, undermining companies’ willingness to invest in new productive capacities and boost the size of their workforce.
Upside risks to the inflation scenario prevailed, as implied by the economic analysis and confirmed by the strong monetary and credit growth in an environment of already ample liquidity. The Governing Council thus decided on 2 March 2006 to increase the key ECB interest rates by a further 25 basis points.