Free Trial

MNI POLICY: ECB Review To Focus On Inflation Target, Toolkit

By Luke Heighton
     FRANKFURT (MNI) - The ECB's review of monetary policy strategy will focus
on the definition of price stability, the monetary policy toolkit, economic and
monetary analysis and communication, it said.
     Central bank measures to mitigate climate change will be assessed alongside
financial stability and employment as "considerations" that "can be relevant in
pursuing the ECB's mandate."
     The review will be based on "thorough analysis and open minds, engaging
with all stakeholders" an ECB statement said, and is expected to be concluded by
the end of 2020.
     "Addressing low inflation is different from the historical challenge of
addressing high inflation. The threat to environmental sustainability, rapid
digitalisation, globalisation and evolving financial structures have further
transformed the environment in which monetary policy operates, including the
dynamics of inflation.
     "The Governing Council will take stock of how the monetary policy strategy
has supported the fulfilment of the ECB's mandate under the Treaty over the
years and consider whether any elements of the strategy need to be adjusted," it
     The review will consider the quantitative formulation of price stability,
"together with the approaches and instruments by which price stability is
achieved." The review will also take into account how financial stability,
employment and environmental sustainability can be relevant in pursuing the
ECB's mandate.
     "The Governing Council will review the effectiveness and the potential side
effects of the monetary policy toolkit developed over the past decade. It will
examine how the economic and monetary analyses through which the ECB assesses
the risks to price stability should be updated, also in view of ongoing and new
trends. Finally, it will review its communication practices."
     No further details were given, though President Christine Lagarde did
indicate in the press conference following the Governing Council's January
meeting that the possible effects of climate change are already being considered
in ECB staff macroeconomic models.
     She denied that ECB monetary policy was effectively on hold until the end
of the year, and said the Governing Council would continue to monitor and if
necessary respond to the economic situation.
--MNI Frankfurt Bureau; +49-69-720-146; email:
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$X$$$,MT$$$$,M$$EC$]

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.