This absorption mitigated the potentially inflationary impact of money growth. One important consideration in inflation management is the stability of the inflation rate. Forward-looking transactions build in some expectations about inflation rates over the tenure of the contract.
Significant deviations of actual outcomes from expected ones can cause huge losses to one of the transacting parties, thereby acting as a deterrent to what may be growth-enhancing transactions. The more stable the inflation rate, the less these deviations will be. There appears to be an almost universal correlation between the level of the inflation rate and its stability.