If we want to assess a bank’s stability, we should first look at its capital. The capital ratios of small and medium-sized institutions in the euro area are gratifying. The average Tier 1 capital ratio is 15.2%.
Within this, monetary policy regards the explicit inflationary target as the nominal anchor which it commits itself to reaching, thereby striving to influence the expectations of economic agents. Decisions about monetary policy will reflect the deviation of projected inflation from the announced target.