As a consequence, monetary developments will continue to be monitored closely. Overall, it currently appears that inflation rates should decline to below 2% over the medium term, in particular given the outlook for economic activity and the significant appreciation of the euro.
It also appears that the strong expansion of M3 should not adversely affect this outlook, as portfolio shifts have played a prominent role; in particular, the build up of liquidity should not translate into inflationary pressure as long as economic growth remains modest.