The European Central Bank said Thursday that it would adjust the guideposts it uses to set monetary policy, giving it more room to deploy crisis measures even if inflation rises above its official target. The bank also said it would begin using its clout in bond markets to fight climate change. After concluding an 18-month review of its strategy, the bank’s Governing Council said Thursday that it would no longer aim to keep inflation below, but close to, 2 percent, its guiding principle since 2003. Rather, the bank would simply aim for 2 percent and be ready to accept “a transitory period in which inflation is moderately above target.”“Two percent is not a ceiling,” Christine Lagarde, the president of the European Central Bank, said during a news conference Thursday. The seemingly minor change gives the bank space to keep pumping credit into the eurozone economy even if annual inflation rises above the target, as long as policymakers think the jump is temporary.

Source: New York Times July 08, 2021 11:26 UTC