As we have recently witnessed, financial crises have a considerable impact on the monetary policy transmission process and monetary policymakers’ ability to guarantee price stability. And yet financial crises almost always originate in excessively loose bank lending.10 The last crisis was no exception. In the euro area, M3 growth rose from 5½% in 2004 to more than 11% in 2007.
In comparison with the June 2015 Eurosystem staff macroeconomic projections, the outlook for HICP inflation has been revised down, largely owing to lower oil prices. Taking into account the most recent developments in oil prices and recent exchange rates, there are downside risks to the September staff inflation projections.