ECB Governing Council member Mario Centeno said, “when we are reviewing the strategy, broadening the leeway of the allowable inflation trajectories, it is very important that the forward guidance is adapted to this new framework, otherwise it would lose credibility.” But he emphasized that “there is no overshooting logic or average inflation rate” in the new strategy.
Centeno explained that the new 2% symmetric inflation target means “positive or negative deviations are equally undesirable”. It gives “greater room for maneuver than before.” “The strategy admits a temporary and moderate inflation values above 2% … We must be patient and tolerant with deviations that we would not tolerate previously,” he said.
He also said the main cause of recent rise in inflation are “eminently temporary”. And, “it is expected that these factors, which will temporarily raise inflation in 2021, will not last and so our forecast for 2023 is 1.4%, significantly below 2%.”
