Looking back at the period since the introduction of the euro, actual inflation rates were not always in line with price stability, due to exceptional shocks such as the rise in oil prices in recent years. However, these shocks did not undermine the credibility of our promise to ensure price stability over the medium term and therefore did not derail inflation expectations.
This was due to our medium-term orientation of monetary policy which is aimed at providing a stable anchor for economic agents. Indeed, the best contribution of monetary policy to economic growth is when inflation and inflation expectations are firmly anchored at price stability. One way of measuring our success in providing this long-term anchor is to study long-term market expectations for inflation.