To sum up, annual HICP inflation rates are projected to remain elevated in 2006 and 2007, with risks to this outlook remaining clearly on the upside. Given the ongoing dynamism of monetary and credit growth in an environment of ample liquidity, cross-checking our monetary and economic analyses supports the assessment that upside risks to price stability prevail over the medium term.
It is against this background that the Governing Council of the ECB decided to further raise key ECB interest rates in two quarter-percentage increments on 3 August and 5 October to establish the minimum bid rate of the main refinancing operations of the Eurosystem at 3.25%. These actions have helped to keep inflation expectations solidly anchored at levels consistent with price stability.