and highest income quintiles increased to 2. 2 percentage points in october 2022, its highest level since 2006 ( slide 9, left - hand chart ). this inflation gap between poorer and richer households is mainly driven by relative price increases for energy and food ( slide 9, right - hand chart ). monetary policy can do little about such relative price changes. even tighter monetary policy, leading to lower headline inflation, would not have prevented such uneven effects across households. only governments have the mandate and tools to address distributional issues. as regards the second type of measure, governments must address the underlying sources of the supplyside shocks that are likely to affect the structure of the economy more persistently. this requires public investment and decisive structural reforms that foster potential growth and, at the same time, help to dampen inflationary pressure over the medium term by reducing supply - side constraints. in this regard, the next generation eu programme offers a historic opportunity. [ 12 ] disbursements under the recovery and resilience facility ( rrf ) are expected to stay at high levels over the coming years. a swift and efficient implementation of the key investment projects and reforms envisaged in the national plans under the rrf is key for boosting investment and potential growth. so far, governments have often not followed the above prescriptions. they focussed mainly on a combination of untargeted measures, fossil fuel subsidies and government consumption to soothe the damages inflicted by the energy crisis. only a small share of the temporary fiscal measures implemented to alleviate the burden of rising energy prices target low - income households ( slide 10, left - hand side ). rather than cutting taxes for vulnerable households or providing transfers to those in need, governments have mostly resorted to broad - based tax cuts or subsidies, or to outright energy price caps. in addition, many measures support short - run fossil fuel consumption, thereby working against efforts to move away from fossil energy sources. in terms of their budgetary impact, only 1 % of the total measures contribute directly to the green transition. tax cuts and subsidies for fossil fuels, unless properly designed, incentivise neither the efficient use of energy nor investment in energy - saving technology. moreover, public investment will remain subdued this year and next. it is only expected to pick up in 2024 and 2025, mainly reflecting increased defence spending, which helps to support our security, but has a low contribution to potential growth ( slide 10, right - hand side )

rates at their historically low levels. at the same time, the governing council was constantly alert with regard to the materialisation of upside risks to price stability, as signalled by both the ecb ’ s economic and monetary analyses. in the second half of 2005 and early 2006, the likelihood that average annual hicp inflation could remain above 2 % over the medium term increased and a spill - over to inflation expectations had to be avoided. this scenario of elevated inflation rates remained subject to previously identified upside risks, notably further increases in oil prices and indirect taxes and, particularly, potential second - round effects in wage and price - setting. it was also confirmed by the monetary analysis, given strong monetary growth, robust credit expansion and ample liquidity. as a consequence, by the end of 2005, the regular cross - checking of the ecb ’ s economic and monetary analyses indicated that an adjustment of the very accommodative stance of the ecb ’ s monetary policy was clearly warranted in order to contain upside risks to price stability and preserve the firm anchoring of long - term inflation expectations in the euro area. therefore, in december, the governing council of the ecb decided to raise the key ecb interest rates by 25 basis points, after two and a half years of maintaining these rates at historically low levels. since then the governing council has continued to withdraw monetary accommodation, thereby establishing the minimum bid rate of the main refinancing operations of the eurosystem at 3. 25 % by now. turning to recent developments, all the main indicators of economic activity in the euro area that have become available in the course of 2006 confirm the governing council ’ s assessment that economic growth has gained momentum and, in addition, become more broadly - based and sustained, mainly supported by domestic demand. with regard to consumer prices, annual hicp inflation rates, notwithstanding their decline in most recent months, will remain elevated, at levels above 2 % on average in 2006. as regards 2007, inflation risks remain on the upside. these risks include, in particular, a stronger than expected rise in wages on the back of improving labour markets and a stronger than expected pass - through of past oil price rises. the assessment of upside risks prevailing is confirmed when cross - checked with the monetary analysis, given the ongoing dynamism of monetary and credit growth, ample liquidity and, from a medium - term perspective, a persistent upward trend in the underlying rate of monetary expansion. monetary developments therefore require enhanced monitoring