Moreover, monetary dynamics continued to strengthen in an environment of already ample liquidity, driven by the most liquid components of M3 and, on the counterparts side, by faster credit expansion to the private sector. These developments reflected to a large extent the stimulative effect of the very low level of interest rates.
Against the background of subdued domestic inflationary pressures, and with inflation expectations for the euro area as a whole solidly anchored at levels in line with price stability, the Governing Council concluded during the first half of 2005 that it remained appropriate to keep interest rates at their historically low levels.