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ECB may (slightly) change the inflation target – Deutsche Bank

According to analysts from Deutsche bank, the European Central Bank is tilted toward further easing. They consider the central bank might change the inflation target. 

Key Quotes:

“Since May 2003 the ECB has been adhering to its inflation target of ‘below but close to 2%’. While some central banks have an inflation target range with a lower bound of 1%, the ECB has the lowest inflation target on average.”

“The ECB will hold a strategic review during the current year. Ex-President Draghi already
hinted that the inflation target might be reconsidered. It is expected that the ECB will also look more closely into the side effects of the ultra-loose monetary policy which may also be helpful in healing the divisions in the governing council.”

“With regard to actual policy we still see the risks clearly skewed towards further easing. Hence, it would be no big surprise if the ECB adjusted its current target and joined the FED, BoE and BoJ in setting a symmetric target of 2%. But the implementation of a new target may even take until 2021 as the review is expected to conclude rather towards the end of 2020.”

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