ECB Inflation Target Switch to Bring Doves, Hawks Under One Roof
A Eurosystem monetary authority sign stands outside the European Central Bank (ECB) headquarters as climate activists hold a protest banner ahead of the bank’s rate announcement in Frankfurt, Germany. (Photographer: Alex Kraus/Bloomberg)

ECB Inflation Target Switch to Bring Doves, Hawks Under One Roof

ECB Inflation Target Switch to Bring Doves, Hawks Under One Roof

The European Central Bank’s strategy review is discussing whether owner-occupied housing costs should be added to the institution’s measure of inflation. Bloomberg Economics estimates this would have raised headline inflation by 0.1 percentage point on average since the early days of the euro. Switching the target measure would offset the effect of nudging the target up to 2% from “below, but close to, 2%” -- a move that could persuade both doves and hawks on the Governing Council to get behind the changes.

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