New ECB Inflation Strategy Receives Mixed Grades From Markets
Nearly half of respondents said they raised their forecasts through 2023 by an average of 0.4 percentage point after the institution lifted its inflation goal to 2% and said it would accept a temporary overshoot to ensure price pressures become entrenched. Previously the ECB had aimed for a rate “below, but close to, 2%.”
Some 46% said the new strategy hasn’t influenced their outlook, with 5% expecting even lower rates.
The ECB is in the process of implementing changes to how it conducts monetary policy after an 18-month review. President Christine Lagarde has vowed to be “forceful or persistent” in pursing faster inflation after years of falling short, and officials have pledged to refrain from raising interest rates until inflation of 2% comes sustainably into sight in its projections.
The majority of those surveyed predicts that the ECB’s efforts to consider climate change will make it more difficult to reach its target. Two-thirds say the central bank won’t have a meaningful impact on environmental protection in the European Union.