Monetary policy

Why a medium-term inflation target?

The medium-term orientation means that the inflation target is to be met over a medium-term horizon (usually interpreted to be around two years), rather than at any given point in time. Consequently, the central bank does not have to respond immediately to each inflation deviation from 2%. This provides flexibility, ensuring a monetary policy response to inflation target deviations that is context-specific, based on the origin, magnitude and persistence of the deviation.