Facing unease over the spread of a more-contagious variant of the coronavirus, the European Central Bank says it will maintain its stimulus in the form of ultra-low interest rates until inflation “durably” reaches its 2 per cent target.
The ECB said it would not back off its efforts to support the economy even if that resulted in a “transitory” period of inflation moderately above target.
The bank’s policy meeting on Thursday was the first to employ the bank’s new monetary policy strategy that analysts say would permit the bank to employ stimulus for longer periods.
The strategy abandoned the bank’s old inflation target of “close to but below” 2 per cent in favour of a “symmetric” 2 per cent target that allows for extended stimulus in times of trouble – even if that means briefly overshooting the inflation target.
The bank otherwise left its key rates and stimulus programs unchanged.