deal or a disorderly outcome. 1 / 6 bis central bankers'speeches just a couple of weeks ago, the central bank published our revamped financial stability review3. even if you don ’ t get through the whole report, i recommend the first couple of pages at least. they highlight what we see as the key risks currently facing the irish economy and financial system. it also addresses how we can build resilience to these risks. a disorderly brexit is one of the main risks on the horizon. as the possibility of a no deal scenario looms ever larger, the uncertainty around the final outcome is already weighing on business and consumer sentiment. within the central bank, we have been working on brexit since before the referendum4. the work has focused on a few main areas : first – understanding the possible effects of brexit, in terms of the risks to the irish economy, to the financial system, and to consumers. since the referendum in june 2016, the main impact thus far has been through the depreciation of sterling against the euro. however, the significant trade and investment links with the uk mean that the irish economy is more exposed to the risks from the uk ’ s departure than any others, apart from the uk. second ensuring that existing irish financial services firms understand and are planning for the impact that brexit will have on their businesses, so that firms can continue to serve customers after the uk departs the eu. the third important area has been wider contingency planning for the system and taking actions to mitigate the most important and immediate threats to the financial system. ensuring there is no loss of market access for the payment and settlement of equities and exchange traded funds ( etfs ) for example. finally, we have been dealing with the authorisation of firms. of which there were well over 100 applications for either new licenses or extensions to existing ones. these applications vary from large banks to small investment firms or payment institutions. overall, in terms of our wide work on brexit, we have tried to be as transparent as possible. for example, we have published our quarterly reports prepared for the commission of the central bank ( our board ), albeit in redacted format on our website5. a no - deal brexit would likely bring considerable volatility to financial markets, with heightened stress and a potentially large depreciation of sterling6. following the financial crisis, we have been building resilience in

spending is likely to grow more gradually and broadly in line with developments in incomes. the recent ecb staff macroeconomic projections point to a somewhat improved growth outlook for this year and next as compared to the past two years. taking mid - points of the ranges, the projections foresee economic growth of around 2 per cent in both 2006 and 2007, as compared with 1. 4 per cent last year. while it has taken time, slowly the euro area economy is returning towards its trend growth rate. inflation developments having spoken about activity developments, i will now turn to talk about inflation developments and prospects, before moving on to talk about monetary policy. the headline rate of inflation ( hicp ) in the euro area has remained just above 2 per cent in recent years, mainly as a result of the strong increases in energy prices and, to a lesser extent, rises in administered prices and taxes. however, underlying domestic inflationary pressures have been relatively subdued and, overall, the passthrough of past oil price increases to consumer prices has been limited. the subdued growth in domestic demand in recent years helps explain the limited ability of producers to pass - on increases in input costs to consumers. another important factor in this respect has been moderate wage growth, which, in turn, has reflected the subdued nature of labour markets. it was against this background that the governing council was able to keep interest rates unchanged at historically low levels for two and one - half years between june 2003 and december 2005. maintaining price stability – monetary policy decisions why then, you might ask, given this background, has the governing council twice raised interest rates in the past three months? the answer lies in the gradual upward creep of inflation risks. in the course of 2005, inflation projections were progressively revised upwards, mainly, though not exclusively, reflecting stronger than expected increases in oil prices. reflecting this, as the year progressed, upside risks to the maintenance of medium - term price stability were viewed to be gradually increasing. this assessment was reinforced by the evidence of the monetary analysis, which pointed to strong monetary growth, ample liquidity and rapid expansion of credit – especially consumer credit, notably for housing. by the end of 2005, the evidence from both the economic and monetary perspectives was that an adjustment of the very accommodative stance of the ecb ’ s monetary policy was warranted. therefore, on 1 december last, the governing council decided to increase interest by 25 basis points. with risks to the outlook for inflation remaining on the upside