Financial conditions for a number of countries tightened, exchange rates started to come under downward pressure, and policymakers were faced with the need to accelerate the crafting of responses. That pressure was lessened when the Fed did not, in the end, begin the “taper” in September. Since then, stock markets have advanced, long-term interest rates have edged down and the US dollar has weakened.
Looking through this volatility, the pace of monetary expansion in the euro area has continued to decelerate markedly and supports the assessment of diminishing risks to price stability in the medium term. Developments within M3 clearly reflect market participants' specific investment responses to the intensification of the financial turmoil, but increasingly also the impact of the past reduction in the key ECB interest rates.