Although the decomposition of labour productivity is subject to significant measurement uncertainty, there is robust evidence that slower productivity growth in the euro area since the mid-1990s reflects both lower growth in TFP and less capital deepening.
Price stability is defined as a year-on-year increase in the harmonised index of consumer prices (HICP) of below 2% for the euro area as a whole. Price stability is to be maintained in the medium term. The strategy consists of two pillars. The first pillar is a prominent role for money. Ultimately, inflation is a monetary phenomenon.