Policy must work at keeping price expectations from falling too far, just as hard as it worked to get expectations down from excessive levels in earlier times, by articulating goals clearly, and being seen to take action consistent with achieving those goals.
A close understanding of the framework of our analysis is indispensable in order to fully grasp the policy pursued by the ECB. The first element of the ECB’s monetary policy strategy is the published definition of price stability. Price stability has been defined as “a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%”.