The European Central Bank governing council approved its “new monetary policy strategy” yesterday by announcing that the inflation target will no longer be “below but close to” 2%, but instead “symmetric 2%” over the medium term. This, as an ECB release states, “may also imply a transitory period in which inflation is moderately above target.”
Unicredit chief economist Erik Fossing Nielsen called the ECB bluff by tweeting: “with all respect. You missed the target for 10 years. What part of the strategy review will facilitate an end to this problem?”
Indeed, the target is just a cover to justify more liquidity expansion for the financial system. In fact, “Other instruments, such as forward guidance, asset purchases and longer-term refinancing operations … will remain an integral part of the ECB’s tool kit,” the bank’s statement says.
