In December 2002 the Governing Council of the ECB announced its decision to conduct a comprehensive evaluation of its monetary policy strategy in the first half of 2003. Since the inception of the ECB, the monetary policy strategy has provided a robust basis for internal decision-making and a consistent framework for external communication, thereby fostering the ECB’s accountability. Indeed, there is evidence that since 1999 long-term inflation expectations – which provide a measure of the central bank’s credibility – have remained consistent with the ECB’s definition of price stability. Less uncertainty about future inflation has helped to reduce the risk premia in interest rates, and thus real financing costs. [...]
