ECB: Symmetry requires appropriately forceful or persistent policy response to large, sustained inflation deviations from target; all tools remain in toolkit for agile response.

ECB: Symmetry requires appropriately forceful or persistent policy response to large, sustained inflation deviations from target; all tools remain in toolkit for agile response.

The European Central Bank (ECB) has reaffirmed its commitment to a symmetric 2% inflation target over the medium term, as announced in its updated monetary policy strategy statement. The Governing Council, led by President Christine Lagarde, emphasized the need for appropriately forceful or persistent monetary policy responses to large, sustained deviations of inflation from the target, whether upward or downward.

The ECB's strategy review, completed in 2025, underscores the importance of maintaining this symmetry. The Governing Council acknowledged that structural shifts, including geopolitical and economic fragmentation, increasing use of artificial intelligence, and demographic changes, make the inflation environment more uncertain and potentially volatile. These factors necessitate an agile response to new shocks [1].

The ECB's toolkit remains comprehensive, with all monetary policy tools available for use. The choice, design, and implementation of these tools will be flexible and context-specific, allowing for an agile response to changing inflation conditions. The Governing Council will continue to assess the appropriateness of its monetary policy strategy periodically, with the next assessment scheduled for 2030.

In the meantime, the ECB will continue to monitor inflation closely. Recent data from Italy shows that inflation remained unchanged at 1.7% year-on-year in June, holding below the ECB's 2% target [2]. While this indicates a stable inflation environment, the ECB remains vigilant to potential risks and uncertainties, including those stemming from global trade disruptions and geopolitical tensions.

The ECB's strategy emphasizes the importance of maintaining anchored inflation expectations, which are crucial for price stability. The Governing Council will continue to use a range of supplementary inflation indicators, including estimates of the cost of owner-occupied housing, to inform its monetary policy decisions.

The ECB's commitment to a symmetric 2% inflation target, coupled with its agile policy response capabilities, positions the institution well to navigate the evolving inflation landscape and maintain price stability in the euro area.

References:
[1] https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.pr250630~aabf988af8.en.html
[2] https://www.bloomberg.com/news/articles/2025-06-30/italy-inflation-unexpectedly-holds-steady-below-ecb-s-2-target