Maintaining price stability – monetary policy decisions Why then, you might ask, given this background, has the Governing Council twice raised interest rates in the past three months? The answer lies in the gradual upward creep of inflation risks. In the course of 2005, inflation projections were progressively revised upwards, mainly, though not exclusively, reflecting stronger than expected increases in oil prices.
Reflecting this, as the year progressed, upside risks to the maintenance of medium-term price stability were viewed to be gradually increasing. This assessment was reinforced by the evidence of the monetary analysis, which pointed to strong monetary growth, ample liquidity and rapid expansion of credit – especially consumer credit, notably for housing.