In 2003 the Governing Council announced that within the range of inflation rates consistent with price stability, a rate “close to 2%” should be the aim of policy in the medium term. But there is scope for inflation to vary within the range along the way to convergence with the medium-term policy aim, and many path configurations are possible.
Second, the medium term itself is not a pre-set time span, but it is dependent on the underlying shocks that may explain inflation dynamics from time to time. The former type of discretion – related to the path of convergence of inflation to its mediumterm level – is critical when supply shocks are positive, that is, expansionary and disinflationary.