There are, however, other benefits associated with an explicit quantitative definition of price stability. It enhances transparency and facilitates the ECB in holding itself accountable for achieving its mandated price stability objective.
A different, less specific definition of price stability could have led to uncertainty among economic agents, which in turn could have led to higher inflation expectations, higher market interest rates and increased risk premia. Indeed, the stability of market interest rates during the euro changeover period is testament to the success of the ECB’s strategy.