Thus, an environment of stable prices fosters the functioning of the price mechanism, favours allocation efficiency, anchors inflation expectations and reduces market uncertainty and risk premia. Maintaining price stability is therefore a necessary condition for sustainable growth and job creation and this is recognised very widely. It is in particular a strong belief that the Eurozone shares with the United Kingdom.
The institutional framework for monetary policy in the euro area has helped the ECB to keep inflation low and stable. The credibility of the ECB is reflected in low long-term inflation expectations. And this credibility was already high at the start of European Economic and Monetary Union.