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Inflation, Price Stability, and Monetary Policy: On the Legality of Inflation Targeting by the Eurosystem

In: Inflation and Deflation in East Asia

Author

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  • Helmut Siekmann

    (Joahnn-Wolfgang-Goethe-Universität Frankfurt am Main)

Abstract

The term “inflation” is never used by the primary law of the European Union when unfolding tasks, objectives, and instruments of monetary policy. Only by re-defining its primary objective “maintain price stability” could the Eurosystem construe an “inflation target” as its legal goal in this way, eschewing to fall back on Article 127(5) TFEU, which would also demonstrate this aberration when interpreted correctly. To sum up, inflation targeting, as a task, competence, or objective of the Eurosystem, is—legally—highly questionable according to the common standards of interpretation, if it would imply striving for an increase of price levels greater than zero. It might, however, be safe to predict that the Court of Justice of the European Union would disagree.

Suggested Citation

  • Helmut Siekmann, 2023. "Inflation, Price Stability, and Monetary Policy: On the Legality of Inflation Targeting by the Eurosystem," Financial and Monetary Policy Studies, in: Frank Rövekamp & Moritz Bälz & Hanns Günther Hilpert & Wook Sohn (ed.), Inflation and Deflation in East Asia, chapter 0, pages 125-146, Springer.
    • Handle: RePEc:spr:fimchp:978-3-031-27949-2_8
    DOI: 10.1007/978-3-031-27949-2_8
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    2. Peter Mwai Kinuthia, 2025. "Effect of Macroeconomic Policy Implementation on Unemployment in Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(5), pages 5533-5546, May.
    3. Josefine Quast & Maik H. Wolters, 2023. "The Federal Reserve's output gap: The unreliability of real‐time reliability tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(7), pages 1101-1111, November.

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