Price stability is defined as a year-on-year increase in consumer prices for the euro area of “below, but close to, 2 per cent”. The “close to” was added in 2003 to establish a safety margin above zero inflation to guard against deflationary risks.
In the light of the long lags involved in the transmission of monetary policy, price stability is to be maintained in the medium term. Second, there are the “two pillars” of economic and monetary analyses.