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%.”

In an FT interview, ECB President Christine Lagarde said the old inflation target of “below, but close to, two per cent” was “vaguely ambiguous and a little bit complex”.  The target with the new strategy was a “simple, solid, symmetric two per cent target”

The 2% target now is “solid because it gives us space to manoeuvre our monetary policy, it is a well-accepted measurement of price stability around the world and it limits the welfare cost of too high inflation.”

She added that the third “s” of symmetry is really important, because “we affirm very clearly that there may be deviations up or down… we know that it’s not going to be a straight two per cent linearly forever once we reach the target and we’ll recognise that it will oscillate around two per cent. ”

Lagarde also said ECB’s policy rebound will be especially forceful or persistent”, intending to signal that” we will not prematurely tighten”.

Full interview here.

In a series of tweets, ECB Governing Council member Peter Kazimir said that the new inflation target of the strategic review was an “evolution that was necessary, we were looking for”. He added, “the redesign will enhance our abilities to guard & deliver on the primary objective – to maintain price stability in the euro area.”

“Low inflation has become entrenched over the past few years and our revamped strategy says that we will not allow this to happen in the future,” he said. “To achieve that also means, that inflation may sometimes moderately and temporarily be above 2 percent.”

“The policy objective is clear and simple. This clarity will strengthen our toolbox and enhance anchoring of inflation expectations as desired.

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ECB Vice President Luis de Guindos said in an event today, “next week we will discuss new forward guidance that includes new definition of price stability.”

“The formulation of the forward guidance has to be modified to include the new definition of price stability”, he added.

The comment was inline with Preisdent Christine Lagarde that there will be “some interesting variations and changes” in the upcoming July 22 meeting.

ECB Governing Council member Francois Villeroy de Galhau said the new 2% symmetric inflation target is a “significant change”. But, “there is no point putting in rules with such-and-such predetermined threshold or duration” on inflation overshoot.

“In the hypothesis that we stop net purchases under the pandemic emergency purchases program next March, our monetary policy will remain very accommodative for as long as necessary, thanks to our quartet of unconventional tools. There is no doubt about that,” Villeroy added.

Yannis Stournaras said that the new strategy will leave ECB better prepared for further crisis. Ignazio Visco noted ECB is not adopting average inflation target like that Fed, which suggests a period of catch-up in inflation.

ECB President Christine Lagarde told Bloomberg that there will at “some interesting variations and changes” in the upcoming July 22 meeting. “It’s going to be an important meeting,” she added. “Given the persistence that we need to demonstrate to deliver on our commitment, forward guidance will certainly be revisited.”

The immediate task for the Governing Council to align the statement and forward guidance with the result of the strategic review. “We’re going to look at the circumstances, we’re going to look at what forward guidance we need to revisit, we’re going to look at the calibration of all the tools we are using to make sure that it is aligned with our new strategy,” she said.

Regarding the PEPP program, she expected it to continue until “at least” March 2022, then followed by a “transition into a new format”, without elaboration. She emphasized, “we need to be very flexible and not start creating the anticipation that the exit is in the next few weeks, months.”

In the accounts of June 9-10 meeting, ECB said, “it was stressed that the recovery was at an early stage and lacked robustness, as it depended heavily on policy support”. The projected path for the economy was ” was subject to significant uncertainties and risks”. An ” undue tightening of financing conditions at the current juncture could jeopardise the ongoing economic recovery and the outlook for inflation.”

Hence, “a noticeable slowing of the pace of purchases for the next quarter was therefore seen as inappropriate at the current juncture”. A remark was even made that, “in view of the persistent inflation shortfall projected in the June staff projections, even an increase in asset purchases as the main monetary policy instrument could be justified at present.”

Nevertheless, “in view of the better outlook for growth and inflation and the associated upside risks, it was, however, also argued that, to provide the same degree of accommodation, asset purchases should be scaled back somewhat.” Concerns were also expressed about potential side effects “if the highly accommodative monetary policy stance was maintained much longer.”

Overall, most members consent that net PEPP purchases should continue at a significantly higher pace in Q3. But the “reaction function” on purchases would “continue to rely on a joint assessment of financing conditions and the outlook for inflation over the medium term”.

Full meeting accounts here.

Bundesbank President Jens Weidmann said ECB is “”not striving for either lower or higher rates” of inflation with the new symmetric target. He added, the 2% medium term inflation goal is a “clear and easily understandable objective,” and that “temporary deviations from the target in either direction can occur.”

Separately, Governing Council member Olli Rehn said the “new inflation goal is unambiguous.” Clearly, the “medium-term core inflation forecast of 1.4% below new aim.”

Another Governing Council member Francois Villeroy de Galhau said ECB will still need to analyze the meaning of a “temporary” overshoot of inflation. “We didn’t discuss any duration, we didn’t discuss any numbers. It’s all about the context,” he said. “In monetary policy, you have to combine the direction with judgment. We set the direction very clearly.”