July 31, 2021

ECB Aims for Slightly Higher Inflation, Stops Short of Fed’s Major Shift

FRANKFURT—The European Central Bank unveiled a new policy framework that will likely keep its easy-money policies in place for longer and will aim to take account of housing prices as the eurozone emerges from the Covid-19 recession, but it stopped short of the major policy shift announced by the Federal Reserve last year.

The changes, the ECB’s first in nearly two decades, aim to give policy makers a broader tool kit to navigate deep shifts in the global economy, including the failure of ultralow interest rates to push inflation higher.

The central bank said in a statement it would aim to keep eurozone inflation at 2% over the medium term, instead of the current target of just below 2%, and would allow room to overshoot its target when needed. It also said it would move to incorporate owner-occupied housing costs into its calculation of the inflation…

Read full article here: www.wsj.com