Both the reasoning in the Maastricht Treaty and many economic analyses show that the best contribution the single monetary policy can make to employment growth is to concentrate on price stability. Without such a clear approach there is a danger that the public may question the commitment of the Eurosystem to the goal of maintaining price stability.
Inflation expectations, risk premia and thus long-term rates would rise. This would increase the cost of the investment which is necessary for a sustained and lasting rise in the standard of living. Even under the best possible circumstances, though – i.e.