Hintavakaus

Hintavakaus is the Finnish term for price stability, defined as a stable general price level over time with inflation kept at a low and predictable rate. In most advanced economies, the target is around 2 percent inflation in the medium term, though the exact target can vary by framework and country. Price stability is a central objective of monetary policy because it reduces uncertainty, preserves purchasing power, and supports sustainable economic growth, while avoiding the distortions caused by high inflation or deflation.

Central banks pursue hintavakaus through tools such as policy interest rates, open market operations, and macroprudential measures, complemented by transparency and forward guidance. Inflation is usually measured by the consumer price index (CPI); some frameworks also use core inflation or the harmonized CPI (HICP) to gauge underlying price movements. Many economies operate an inflation-targeting framework, while others employ price-level targeting or other variants of nominal anchor regimes.

In Finland and the euro area, the target is aligned with the European Central Bank’s mandate to achieve price stability, typically aiming for inflation close to 2 percent over the medium term. The Finnish term is commonly used in domestic policy discussions and reflects integration with EU monetary policy.

Benefits and challenges: Price stability reduces uncertainty, lowers the cost of capital, and supports long-term planning. It can be difficult to maintain during supply shocks, energy price swings, or financial crises. Critics argue that a strict focus on inflation may neglect employment or output; some economists advocate alternatives such as nominal GDP or price-level targeting.