- European Central Bank approves new monetary policy strategy.
- New strategy contemplates a symmetric inflation target of 2% in the medium term.
- The euro clings to daily gains.
The European Central Bank (ECB) announced the results of its strategy review. It highlights the symmetric inflation target of 2% in the medium term. The euro appreciated in the market with the announcement.
Symmetric target and climate change
The European monetary authority concluded the review that began in January 2020, the most relevant being the established objective. “The Governing Council considers that the best way to maintain price stability is by having a 2% inflation target in the medium term. It is target is symmetrical, which means that the positive or negative deviations from that goal are just as unwanted.”
In the review, they pointed out that when the economy operates close to the lower limit of nominal interest rates, “especially strong or persistent monetary policy measures are necessary to prevent negative deviations from the inflation target from taking hold, which could also imply a transitional period in which inflation is slightly above target. “
In the document is confirms that the main monetary policy tool continues to be interest rates. “Other instruments, such as indications on the future orientation of monetary policy, asset purchases and longer-term financing operations, which during the last decade helped to mitigate the limitations derived from the lower limit of nominal interest rates , will continue to be an integral part of the ECB’s suite of instruments and will be used as needed, ”the statement reads.
With regard to inflation indicators, the ECB stated that el Harmonized Index of Consumer Prices (HICP) continues to be the appropriate indicator to assess price stability. It asks that the costs related to the home ownership be included in it.
There was a special mention by the ECB to climate change, pointing out that it has implications for price stability and promises to present an ambitious plan in this regard.
The next meeting of the Governing Council will be on July 22. While the next evaluation of the monetary policy strategy is planned for 2025.
The euro It is among the best performing currencies on Thursday, and against the dollar it is trading at two-day highs.
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
