Finnish central bank chief Olli Rehn on Friday welcomed the European Central Bank’s Thursday decision to start a strategic review and said it should consider adopting a flexible and symmetrical inflation target.
The European Central Bank launched a broad review of its policy on Thursday that is likely to see new President Christine Lagarde redefine the ECB’s main goal and how to achieve it.
The strategic review, which Rehn had been calling for since October 2018, will not seek to alter the ECB’s basic goal of maintaining price stability, he said. But he called for a different definition of its inflation target.
“One strong option is to move closer to the practices of other central banks’ flexible inflation target,” Rehn told reporters.
The ECB’s existing definition of price stability aims at prices rising at below 2%, while its inflation target definition sets it “close but below 2%”.
“This double-barrelled definition deviates downwards, meaning it is tighter, from the other central banks’ goals, which are usually symmetric and at around 2%,” Rehn said.