The ECB is moving rapidly towards a Fed-style average target
- A credibly symmetric, medium-term inflation target would achieve similar outcomes as average inflation targeting
- Tracking a broader set of variables, assets of financial institutions and nominal GDP, could help the ECB reconcile its secondary objectives with primary mandate
The ECB has dived into this idea today. It should be euro-negative but the market just doesn't believe they have a path to 2% inflation at any point, let alone exceeding it.
