While export demand continues to have an expansionary impact, domestic demand remains subdued, especially in the case of private consumption. The monetary analysis indicates that there is a persistently large liquidity overhang in the euro area. This is mainly the result of previous portfolio shifts.
In view of the lack of consumer confidence, I do not see any danger of this excess liquidity leading in the near future to increased price pressure as a result of a sudden surge in demand. The very low level of key interest rates, the ample liquidity supply and the favourable financing conditions are providing plenty of scope for economic recovery.