FRANKFURT (Reuters) – The European Central Bank will not try to make up for lost inflation after periods of anaemic price growth and will not strive to overshoot its new 2% target, German central bank chief Jens Weidmann said on Friday.
The ECB unveiled a new strategy on Thursday which set its inflation target at 2%, ditching a previous goal of “below but close to 2%”, seen as a clumsy and ambiguous formulation.
While the ECB said it may at times exceed this target, Weidmann said this will not be a goal.
“We are not striving for either lower or higher rates,” Weidmann, an influential voice on the 25-member Governing Council, said. “That was important to me.”
Investors were also keen to know if the ECB would follow a “make up” strategy, aiming for higher inflation after longer periods of undershooting its target.
Weidmann, however, dismissed this idea.
“We do not make our monetary policy contingent on targets not met in the past: our strategy remains forward-looking and takes into consideration the new challenge of the effective lower bound.”
The ECB has undershot its target for nearly a decade and its projections predict low inflation for several years to come.
(Reporting by Balazs Koranyi; Editing by Catherine Evans)