MNI BRIEF: ECB Maintains 2% Price Target As Outlook Uncertain

The European Central Bank has affirmed it will still target a 2% symetric inflation target in coming years, but it sees geopolitical shifts, economic fragmentation and Artificial Intelligence all making the inflation environment more uncertain, the Governing Council concluded in its assessment of the Strategy Review published on Monday.

“This assessment was a valuable opportunity to challenge our thinking, check our policy toolkit and fine-tune our strategy," ECB President Christine Lagarde said from Sintra.

After more than a year of discussing an update of the 2021 Strategy Review, the ECB kept its 2% symmetrical inflation target, stressed that all monetary tools remain in its tool kits and updated the fact that “symmetry requires appropriately forceful or persistent policy response to large, sustained deviations of inflation from target in either direction”, changing the previous language that said that had to react more forcefully in the lower zero bound.

The ECB also stated that the next Strategy Review will be in 2030, the press release said.