New inflation target set to bind ECB to ‘lower for longer’ strategy

European Central Bank, Frankfurt
European Central Bank, Frankfurt
Photo: Flickr/André Douqué

The European Central Bank’s (ECB) new 2% symmetric inflation target binds the institution to a policy of prolonged monetary stimulus, say analysts.

Observers point out that the higher inflation goal, with inflation expectations at just 1.4% in 2023, will require the ECB to keep the foot on the accelerator for years to come.

Additionally, the central bank’s review stated that when operating at the lower bound, “forceful or persistent” monetary action is warranted. This approach “may also imply

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