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”.
