ECB’s Stournaras: New Strategy Makes Us Better Able to Deal with Future Shocks

12 July 2021

By David Barwick – FRANKFURT (Econostream) – The new monetary policy strategy of the European Central Bank will better enable the institution to address future shocks, ECB Governing Council member Yannis Stournaras said Sunday.

In an opinion piece published in Greek newspaper Kathimerini, Stournaras, who heads the Bank of Greece, said, ‘With the new formulation of the monetary policy strategy, I am confident that we are better prepared to deal with any future economic shocks. The central banks of the euro area countries will be able to react more promptly and effectively to economic developments and to maintain favourable financial conditions and stable prices.’

Despite the ‘drastic measures’ taken by monetary authorities over the last decade, ‘we have not yet, as our latest forecasts in June suggest, approached the level of inflation considered compatible with price stability in the medium term’, he observed.

The new formulation of the price stability objective ‘makes it clear that 2% is not the maximum level considered acceptable for inflation, but our symmetric target’, he said.

Deviations upwards or downwards ‘should be limited as much as possible’, he said, but under circumstances like those at present, forceful and persistent action is needed to prevent sustained below-target inflation. This may involve inflation ‘at levels slightly above the 2% target for a limited period of time.’