Consequently, the Governing Council of the ECB has announced a quantitative reference value for M3 growth, which has been set at an annual rate of 4½%. Under normal circumstances, substantial deviations from the reference value would tend to indicate future risks to price stability. However, monetary policy does not react to deviations of monetary growth from the reference value in a “mechanistic” way.
In the first instance, such deviations will be thoroughly analysed to infer any signals which they may send about the prospects for price developments. If this analysis points to a threat to price stability, monetary policy will react in a manner appropriate to counter this threat, rather than attempt to eliminate the deviation of monetary growth from the reference value in the short term.