The European Central Bank's Governing Council has released an updated monetary policy strategy following a comprehensive assessment. This update comes after the strategy review conducted in 2020-21, fulfilling the Council's commitment to periodically evaluate its approach.
The revised strategy is designed to address significant changes in the inflation environment, which may become more volatile due to factors like geopolitical shifts, economic fragmentation, artificial intelligence advancements, demographic changes, and environmental sustainability threats. The aim is to maintain a symmetric 2% inflation target by taking decisive monetary policy actions when necessary.
ECB President Christine Lagarde said, "I am happy to announce that the Governing Council during its latest meeting approved the ECB’s updated monetary policy strategy." She emphasized that this assessment was crucial for refining their approach and ensuring they are well-equipped to maintain price stability amid growing uncertainties.
All existing monetary policy tools will remain available to the Governing Council. Their application will be guided by a comprehensive proportionality assessment and will be adaptable enough to respond swiftly to inflationary changes. Decisions will consider not only expected inflation and economic trends but also potential risks and uncertainties through scenarios and sensitivity analyses.
The first regular meeting applying this updated strategy is scheduled for July 23-24, 2025. The next periodic assessment of the monetary policy strategy is anticipated in 2030.
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