By Laurie Laird
LONDON (MaceNews) – The European Central Bank Thursday lifted its inflation target to 2% and vowed to tolerate a short-term overshoot of the target.
The new target is “not a ceiling,” said ECB President Christine Lagarde, presenting the Bank’s strategy review. Previously the bank aimed for a target of close to but below 2%.
While presenting the ECB’s new target as “symmetrical,” Lagarde stressed that that the Governing Council is not following the Federal Reserve in pursuing “average” inflation targeting. “Our commitment is to deliver the two percent target.”
The ECB’s announcement caught observers by surprise, as governing council members have long suggested that the result of the strategy review – started before the Covid pandemic – would come in September. Lagarde deflected questions as to why the presentation came earlier than expected and at short notice.
The central bank also threw its weight behind a recalibration of the benchmark HICP inflation series to better reflect that cost of owner-occupied housing, although Lagarde suggested that the creation of a new data set could be “years” away.
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Contact this reporter: laurie@macenews.com.
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