Another significant factor influencing medium-term trends in inflation is the public's expectations of inflation. These expectations have an important bearing on whether transitory influences on prices, such as those created by changes in energy costs, become embedded in wage and price decisions and so leave a lasting imprint on the rate of inflation. It is encouraging that inflation expectations appear to have remained contained.
It is the Governing Council's view that these rules are indispensable for Economic and Monetary Union and are also in the interest of the Member States. The Stability and Growth Pact has been successful in promoting sound public finances in the euro area.