Empirical evidence of monetary developments in the euro area points towards a stable relationship between demand for the broad monetary aggregate M3 and price developments as well as towards good leading indicator properties of M3 growth for inflation over the medium term.
The ECB does not pursue monetary targeting, instead, it has set a reference value for the growth of the broad monetary aggregate M3 for a variety of reasons. This reference value is derived on the basis of the Eurosystem's definition of price stability, i.e.