The European Central Bank said on Thursday it will aim for a symmetric 2 percent inflation target and will allow a temporary overshoot.
“This target is symmetric, meaning negative and positive deviations of inflation from the target are equally undesirable,” the bank said in its latest monetary policy strategy review statement.
That said, when the economy is operating close to the lower bound on nominal interest rates, it requires especially forceful or persistent monetary policy action to avoid negative deviations from the inflation target becoming entrenched, the bank said.
“This may also imply a transitory period in which inflation is moderately above target,” the ECB added.
The new inflation target is the outcome of a strategy review that the ECB launched in January 2020, the first such exercise since 2003.
The central bank’s earlier targeted Eurozone inflation “below, but close to 2 percent.”