Central bank
Strategieck: ECB relies on flexibility against inflation
Customs conflicts, wars, climate change: The environment for the central bank is complex, forecasts for inflation and the economy are difficult. The ECB is preparing for uncertain times with a strategic deck.
After checking its monetary policy strategy, the European Central Bank keeps all options in the fight against inflation. She retains her inflation goal of two percent and at the same time emphasizes her flexibility, as the ECB in Frankfurt announced. “Symmetry requires an adequate powerful or long -lasting monetary response to strong, permanent deviations in the inflation rate from the target value in both directions,” said the central bank. The inflation environment is becoming more uncertain.
All monetary policy instruments that the ECB council had remained, the central bank said: “By sufficient flexibility” when used, it will be possible to “react agile to changes in the inflation environment”.
Regular filing of strategy
The ECB checks its monetary policy strategy at regular intervals. In 2021 she had re -formulated her inflation goal and granted more flexibility. Since then, the ECB has been aiming for an annual inflation rate of two percent for the euro area. This means that the central bank does not have to react immediately from its goal if the inflation is deviated.
ECB President Christine Lagarde said that the central bank had an “even more solid basis” after the strategy deck completed in order to fulfill its mandate for price stability in an increasingly insecure environment. “We are prepared for all circumstances.” The next review of the strategy is in 2030.
The primary goal of the ECB is a stable euro. The central bank sees this if the prices do not rise too much: high inflation rates reduce the purchasing power of consumers. According to a series of interest reductions, inflation in the euro area in May was 1.9 percent, economists expect an interest break on the next decision of the ECB on July 24th.
In Germany, inflation recently subsided. In June, consumer prices were 2.0 percent above the level of the previous year, as the Federal Statistical Office announced on the basis of preliminary figures.
The ECB announced the current review of its strategy in the vicinity of its forum in the Portuguese Sintra. From this Monday there will be central bankers and economists. Prominent guest is the head of the US Federal Reserve Fed, Jerome Powell, who is repeatedly exposed to verbal attacks by President Donald Trump and his demands for interest rate cuts.
dpa
Source: Stern
