The eurozone's 2% fixation

Brussels

ECONOMIC policy discussions in Europe used to be dominated by the number three, namely the 3 per cent-of-GDP upper limit on national fiscal deficits. Although the fiscal rules enshrined in the Maastricht Treaty were in fact much more complex, public debate tended to focus on the 3 per cent figure, especially when deficits ballooned during the euro crisis nearly a decade ago.

Today, however, the number two holds sway over economic policymakers, in the form of the European Central Bank's 2 per cent inflation target. Although the Treaty on the Functioning of the European Union does not define price stability, the ECB, whose sole official task is to ensure price stability in the eurozone, itself decided some years ago that it means inflation "below, but close to, 2 per cent" over the medium term.