The first three principles that (i) inflation is fundamentally a monetary phenomenon, (ii) that price stability has important welfare benefits, including its contribution to sustained growth and reduced output volatility, and (iii) that there is no longterm trade-off between unemployment and inflation are widely accepted and clearly underpin and are reflected in the ECB’s mandate and primary policy objective.
The first and third principles are also incorporated in the ECB’s analytical framework and they are overwhelmingly supported by the empirical evidence. These first three principles and the eighth principle about the importance of central bank commitment to a nominal anchor imply that price stability (or an inflation target) should be the primary, overriding objective of monetary policy.