2 Minute Read by Reuters Staff Reuters, FRANKFURT, July 9 – The European Central Bank will not attempt to compensate for lost inflation following years of low price rise, and will not attempt to exceed its new 2% target, according to German central bank director Jens Weidmann. On Thursday, the European Central Bank (ECB) presented a new strategy that sets the inflation target at 2%, abandoning a prior goal of “below but near to 2%,” which was considered as a confusing and vague phrasing. While the ECB has stated that it may occasionally exceed this target, Weidmann has stated that this is not a goal. “We are not aiming for lower or higher rates,” Weidmann, a powerful member of the Governing Council’s 25 members, stated. “It meant a lot to me.” Investors also wanted to hear if the ECB will pursue a “make up” strategy, aiming for stronger inflation after prolonged periods of undershooting. Weidmann, on the other hand, dismissed this notion. “We don’t base our monetary policy on previous performance; instead, our strategy is forward-looking and takes into account the new challenge of the effective lower bound.” The ECB has been undershooting its inflation objective for nearly a decade, and its estimates indicate that inflation will remain low for several years. (Balazs Koranyi contributed reporting, and Catherine Evans edited the piece.)/n
Read More
