Breaking: ECB adopts symmetric 2% inflation target, EUR/USD shakes on high ground

Yohay Elam FXStreet

The European Central Bank has shifted to a symmetric inflation target of 2% contrary to a ceiling at that level. That is a dovish shift, but one that was fully expected by markets. The ECB stated it would allow short-term deviations from that goal, including a moderate spell above target. This is a step back from the Federal Reserve's laxity – allowing higher inflation to compensate for previous undershooting.

The Frankfurt-based institution has stressed that interest rates remain the primary monetary policy instrument and that the next review is due in 2025.

The ECB recommends gradually adding costs of owner-occupied housing over time. However, it has not introduced an immediate change to its inflation target and will continue using the Harmonized Index of Consumer Prices (HICP) as its primary gauge of price stability. That is somewhat more dovish than expected.

EUR/USD has dropped from 1.1844 to 1.1835, a minor dip from the highs.

EUR/USD has been attempting a recovery ahead of the publication, recapturing the 1.18 level and advancing toward 1.1850.

See ECB Strategic Review Preview: Three potential EUR/USD movers to watch

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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