ECB’s Schnabel: Will Ask Ourselves If 2% HICP Goal Still Appropriate

13 July 2020

By David Barwick – FRANKFURT (EconoStream) – The European Central Bank will consider in its strategy review whether its definition of price stability remains appropriate, ECB Executive Board member Isabel Schnabel said on Monday.

In an interview with television program “plusminus” of German broadcaster ARD, Schnabel, according to a transcript provided by the ECB, denied that the ECB’s inflation objective was ‘looking shaky.’

‘What I can say is that we will carefully review our monetary policy strategy’, she said. ‘And we will of course ask ourselves if this inflation aim of 2% is still appropriate.’

Many of the reasons behind the decision to define price stability as being annual HICP of close to but below 2% remain valid, she noted. ‘So it’s not at all certain that we will eventually diverge from this target.’

The strategy review, the conclusion of which the ECB in April deferred from the end of 2020 to mid-2021, is expected to focus on “quantitative formulation of price stability, monetary policy toolkit, economic and monetary analyses and communication practices,” while financial stability, employment and environmental sustainability would also be part of it, according to the ECB.