As a consequence, a sustainable, non-inflationary expansion is likely to involve some moderation in the growth of economic activity to a rate more consistent with the expansion of the nation’s underlying productive capacity. It bears emphasizing that productivity growth seems likely to remain strong, supported by the diffusion of new technologies, capital investment, and the creative energies of businesses and workers.
This is ensured by assigning to the Eurosystem the primary objective of price stability, banning direct financing of government deficits by central banks and precluding any influence by governments or other institutions on monetary policy decisions. However, even in this setting, the conduct of fiscal policies has a clear bearing on the objective of price stability.