ECB’s Weidmann signals openness to tweaking inflation goal – Bloomberg
Bloomberg reports key comments delivered by the European Central Bank (ECB) Governing Council member and Bundesbank President Jens Weidmann late Monday.
In his scheduled speech, Weidmann said that the ECB needs an understandable, forward-looking and realistic inflation goal but not necessarily a higher one.
Signals an openness to change following years of failing to hit the target of inflation “below, but close to, 2%.”
The gain in the capacity to act could be smaller than hoped.
A strong increase in the goal could raise risks that inflation expectations become deanchored.
Higher inflation comes with costs for people.
A realistic and forward-looking definition of our goal allows monetary policy to wait if there are good reasons, in order not to react hectically to every change in incoming data.
It allows the incorporation of the longer-term risks to price stability.