ECB Governing Council member Robert Holzmann said that policymakers had “heated discussions” regarding inflation target last week. Currently the central bank’s definition of price stability is having inflation “below but close to 2%”.
Holzmann said, “Is our monetary policy target – (inflation of) just under 2% – where it should be? Should it be less, should it be more? Should it be symmetrical? Should it be asymmetrical? … We had heated discussions about that last week in the (Governing) Council.”
A focus was on how far inflation could deviate from the the target. Some policymakers support the idea of a band around a target. But some worried that the mechanism would effectively make the bottom of the band the de facto target. Holzmann prefers an inflation target of 1.5%.
