Such an environment would be conducive to economic and financial stability, which would enhance the efficiency of monetary policy. 4  BIS Review 14/2003  It also goes without saying that a more predictable monetary policy is supportive of fiscal discipline. More predictable short-term interest changes are indeed liable to impact on the budgetary equilibrium in several Member States.
In addition, a stable monetary policy able to anchor the inflation expectations of economic agents will generate lower and less volatile long-term interest rates, which will further dampen the risk of budgetary slippages induces by unforeseen interest rate developments. More predictable interest rates are also extremely important for the Luxembourg general government, in spite of the extremely low public debt level observed in Luxembourg.