It thereby sought to establish a solid anchor for inflation expectations and set a benchmark which the public could use to hold the ECB accountable. Price stability was defined as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2% to be maintained in the medium term.
This recognises that monetary policy cannot control price developments in the short term and should not therefore seek to do so. The use of the term “increase” made it clear from the outset that extended periods of deflation are no more compatible with price stability than deflation.