Therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term is warranted. Indeed, it is essential to ensure that risks to price stability over the medium term do not materialise. A price stability-orientated monetary policy is a necessary precondition for sustainable dynamic growth and employment, but it is by no means the only precondition.
Monetary policy needs to be supported by sound public finances, ambitious structural reforms and a competitive economic framework. While monetary policy in the euro area is firmly vested in a supranational body – the ECB – fiscal and structural policies remain the responsibility of national governments. It is important to understand that unsustainable fiscal policies may put the entire euro area at risk.