The ECB’s current target is inflation levels “below 2% but close to”. From now on, the official inflation target will be 2% and overshoots are acceptable.
“The Governing Council believes that price stability is best maintained by aiming for an inflation target of 2% in the medium term. This target is symmetrical, with negative and positive inflation from the target. Deviations mean equally undesirable, “the ECB said in a statement.
ECB Governor Christine Lagarde said at a news conference that the new inflation target was “clear and easy to communicate,” the global newswire reported.
“We know that 2% do not always reach our goals. There may be a moderate temporary deviation in either direction of that 2%, which is fine. We are very much Of concern are sustainable, durable, and significant deviations from the goal, which will require strong action, “she said.
The first regular monetary policy meeting of the Governing Council, which applies this new strategy, will be held on 22 July. Lagarde added that there will be a new policy review in 2025.
In a forecast released in June, the ECB said inflation could reach 1.9% by the end of the year. However, we still believe that these price increases are temporary and inflation will remain below 2% for the foreseeable future.
Fiber2Fashion News Desk (DS)
The European Central Bank has decided to revise its inflation target and allow consumer prices to overshoot as needed. The bank launched its first policy review since 2003 in January 2020. However, the result had to be postponed during the pandemic.
European Central Bank sets inflation target of 2% in new policy review
Source link European Central Bank sets inflation target of 2% in new policy review