The European Central Bank (ECB) President, Christine Lagarde, is scheduled to deliver her remarks on the central bank's Strategy Review during a press conference at 12:30 GMT on Thursday.
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ECB Special Meeting Preview: Three potential EUR/USD movers to watch
By dropping a single word, "below," the ECB would be sending a signal that it does not see 2% annual headline inflation as a ceiling, but rather as a more symmetric target. Will Europe take a page from America? The Fed went further by allowing future, hot inflation to compensate for past weakness. That would probably be a step too far for the German hawks.
ECB adopts symmetric 2% inflation target
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.
About ECB's special meeting
European Central Bank policymakers will hold a special meeting in Frankfurt in a bid to wrap up the institution’s strategy review. The gathering is expected to put the finishing touches on a new definition of price stability. The discussion, while not a formal monetary policy meeting, may also shape the ECB’s plans for when and how to exit the emergency measures it deployed during the pandemic. Its 1.85 trillion-euro ($2.19 trillion) bond-buying program is set to run at least until March 2022.
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