Such risks continue to be associated mainly with oil price developments, uncertainty  BIS Review 19/2005  1  regarding future increases in indirect taxes and administered prices, and potential second-round effects stemming from wage and price-setting behaviour. In this respect, developments in long-term inflation expectations need to be monitored closely.
Our monetary analysis also calls for vigilance regarding upside risks to price stability over the medium term and long term. After moderating in the first half of 2004, M3 growth has strengthened significantly since mid-2004, reflecting the stimulative effect on monetary dynamics of the historically very low level of interest rates in the euro area.