Price stability should not be viewed as a temporary phase, but rather as a lasting - indeed, permanent - feature of the euro area economy. Announcing a quantified definition of price stability and credibly committing to the maintenance of price stability on this definition helps to stabilise medium-term inflation expectations, thereby improving the effectiveness of a monetary policy aimed at price stability.
The 1980s and 1990s provide ample evidence of the costs of inflation. These are often most visible during the process of disinflation, which is just the other unavoidable flip side of the preceding inflation. With price stability achieved in the euro area at the start of Monetary Union, it was vital that the associated benefits were “locked in” by the ECB.