As financial tensions emerged, the policy-relevant signal extracted from the broad based monetary analysis conducted at the ECB confirmed that liquidity in the euro area was ample and continued to increase at buoyant rates. The monetary analysis therefore clearly signalled that medium-term risks to price stability continued to increase.
This insight was crucial to the formulation of our policy response to the financial market tensions. Given that the risks identified have materialised as inflation has trended upwards over recent months, this signal does not seem to have been inappropriate, when assessed now with the benefit of hindsight.