ECB's Strategic Balance: Inflation and Monetary Policy in Focus
The European Central Bank is advised against overreacting to minor dips in euro-zone inflation, with expectations it will rise again. ECB policymaker Boris Vujcic emphasizes the need for a balanced approach, noting the complex global trade environment. A strategy review aims to address quantitative easing and long-term policy directions.
The European Central Bank's policy should not overreact to slight dips in euro-zone inflation below its 2% target, as indicated by ECB policymaker Boris Vujcic.
The ECB recently lowered interest rates, marking the eighth cut in a year, yet hinted at a pause next month despite projecting a mere 1.6% inflation rate for 2023. Vujcic, also the governor of Croatia's central bank, suggests that inflation will rebound as energy prices stabilize and economic conditions improve. He cautions against treating small deviations as problematic, stating that policy overreactions should be avoided.
Amid differing opinions within the ECB, Vujcic views the inflation outlook as balanced but acknowledges uncertainty due to global trade tensions, particularly with the U.S. The ECB's ongoing strategy review notably considers quantitative easing, as past liquidity injections faced criticism for creating market bubbles.
(With inputs from agencies.)
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