The implementation and the rationale of the new inflation target of the ECB

Pierpaolo Benigno, Paolo Canofari, Giovanni Di Bartolomeo () and Marcello Messori

No 205, Working Papers in Public Economics from Department of Economics and Law, Sapienza University of Roma

Abstract: In July 2021, the ECB's target has been revised specifying that the threshold of 2% inflation rate has to be applied symmetrically and with a medium-term orientation. We argue that a symmetric inflation target can offer a strong contribution to anchoring inflation expectations and to limiting the risks due to the zero and effective lower bound constraints. The monetary policy strategy revision plays a key role in the policy mix between fiscal and monetary policies for the post pandemic recovery.

Keywords: Secular stagnation; zero-lower bound; monetary policy (search for similar items in EconPapers)
JEL-codes: E31 E51 E58 (search for similar items in EconPapers)
Pages: 25
Date: 2021-11
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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