In all cases, liquidity refers to the ability to transact in specific assets at a predictable price. 2 For example, a broker-dealer wants to know that it can transact in securities at a price approximating that on the screen. For our purposes today, we can say that when this condition is satisfied, there is an appropriate amount of market liquidity.
Convergence implies that headline inflation will need to be on track to reach levels below, but close to, 2% within a medium-term horizon. The Governing Council will also need to have confidence that the upward adjustment in inflation has a high enough probability of materialising and that it can do so on a sustainable basis.