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Opinion
Daniel Moss

The ECB Shift on Inflation Is in the ‘Whatever It Takes’ Spirit of Draghi

Crises and cataclysms over two decades made European central bankers less inflation averse.  

Lagarde and Draghi in 2019.

Lagarde and Draghi in 2019.

Photographer: Andreas Arnold/Bloomberg
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The European Central Bank has discovered that a bit more inflation need not come with a health warning. While significant in the context of ECB history, the shift brings doctrine into line with real-world forces that officials have wrestled with since the euro's inception. 

Wrapping up the biggest strategy critique in almost two decades, policy makers agreed to raise their inflation goal to 2% over the medium term and regard misses on either side as equally undesirable. The decision is a departure from the previous target of “below, but close to, 2%,” which some officials felt was too vague. The step provides for inflation to go a little above the threshold during a “transitory period.”