ECB sets inflation target at 2% after strategy review

Author: Justin Low | Category: Central Banks

ECB announces the results of its latest strategy review


  • New strategy adopts symmetric 2% inflation target over medium-term
  • This may also imply a transitory period in which inflation is moderately above target
  • Confirms that HICP remains appropriate price measure
  • First regular policy meeting to apply new strategy will be on 22 July
  • Full release
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The decision here has been very much expected and is a move away from their previous inflation targeting of "below but close to 2%". They also add that they will be further incorporating climate change considerations into monetary policy framework.

In any case, this supposed target is merely what the name implies. Given the situation in the euro area pre-pandemic and how lasting inflation is a pipe dream, it is tough to imagine this turning into a significant milestone which allows the ECB to begin a meaningful tightening cycle, all things considered.

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