Furthermore, central banks consequently also have less scope to stimulate the economy using conventional instruments and also to prevent deflationary developments. The latest research indicates that an inflation rate of “close to, but below 2%” is a good compromise between the permanently accruing inflation costs and the occasional benefits resulting from having a greater safety margin.
Moreover, the Governing Council’s credibility would undoubtedly take a major knock if it were to redefine its objective now of all times. It would probably be like what happened when the deficit rules were relaxed in 2005 after several large countries had trouble complying with them. That put paid to the credibility of the Stability Pact once and for all.