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- ECB agrees on new inflation goal of 2%, will allow overshoot
ECB agrees on new inflation goal of 2%, will allow overshoot
Bloomberg reports that according to officials familiar with the matter, ECB policy makers have agreed to raise their inflation goal to 2% and allow room to overshoot it when needed,
The decision marks a significant change from the previous target of “below, but close to, 2%,” which some policy makers felt was too vague. The consensus emerged at a special meeting on Tuesday and Wednesday to conclude the ECB’s first strategy review in almost 20 years.
The revamped strategy could give officials the justification for sustaining ultra-loose monetary policy for longer as they strive to reverse years of below-target inflation, which have weighed on the euro area’s economic potential.
It will also be crucial for guiding the central bank’s actions as the economy recovers from the pandemic. Policy makers are expected to debate after the summer how to exit emergency measures that include an exceptionally flexible 1.85 trillion-euro ($2.2 trillion) bond-buying program.
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