Outgoing ECB Executive Board Member Benoit Coeure said in farewell event today that the central bank should be more flexible with its inflation target. He said, “the ECB should clarify that it aims to deliver inflation of 2% over the medium term. And it could communicate the range of inflation outcomes that can be considered acceptable in normal times.”
A band around the target wouldn’t weaken the central bank’s resolve. He added, “research shows that central banks have a strong incentive to already respond to inflation deviations within the tolerance zone, rather than waiting until inflation has crossed the edges.”
