The ECB has decided to aim for an inflation rate of “two percent” in the future. That shared the European Central Bank this Thursday with. Your job is to keep prices stable over the medium term. Until now, the central bank had considered the target achieved when inflation was “below but close to two percent”. However, the central bank had already missed this target since spring 2013: prices rose more slowly than was desirable from the ECB’s point of view.
In addition, the ECB is changing a key way of looking at the inflation target. In future, the central bank will at least temporarily accept inflation rates that are “moderately above the target value” – if the rates were previously too low from their point of view. Central bankers refer to this monetary policy strategy as a “symmetrical” inflation target. With this, the central bank is no longer forced to react immediately if the inflation rates temporarily deviate upwards or downwards from the percentage target.
The euro currency authorities also recommend that in future the prices for owner-occupied residential real estate should also be included in the calculation of the inflation rate, which they consider to be a key indicator of their monetary policy. However, the ECB sees this as a longer process.
The Governing Council did also decidedto also consider climate change when making monetary policy decisions in the future.
At the beginning of last year, the central bank decided to launch a comprehensive review of its monetary policy strategy. A press conference with President Christine Lagarde is scheduled to take place this Thursday at 2:30 p.m. The ECB has also analyzed all of its communications.
Because of the corona crisis, the ECB had extended the review period by six months. Lagarde had advocated a new inflation target last autumn. “We have to carefully analyze the forces that are driving inflation dynamics today and consider whether and how we should adapt our strategy in response,” she said at a meeting. The ECB should have an inflation target that is credible and that the public can easily understand.