ECB to change policy guidance at next meeting, Lagarde says
12 Jul 2021 | Economic News
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ECB to change policy guidance at next meeting, Lagarde says
The European Central Bank will change its guidance on the next policy steps at its next meeting to reflect its new strategy and show it is serious about reviving inflation, ECB President Christine Lagarde said in an interview aired on Monday.
Announced last week, the ECB’s new strategy allows it to tolerate inflation higher than its 2% goal when rates are near rock bottom, such as now.
This is meant to reassure investors that policy won’t be tightened prematurely and boost their expectations about future price growth, which has lagged below the ECB’s target for most of the past decade.
The ECB’s current guidance says it will buy bonds for as long as necessary and keep interest rates at their current, record-low levels until it has seen the inflation outlook “robustly converge” to its goal.
Lagarde did not elaborate on how that message might change, simply saying the ECB’s aim will be to keep credit easy.
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