The current monetary policy strategy was announced in July 2021, following a thorough review prompted by the various structural economic changes that had occurred since the previous strategy was presented in 2003. Notable among these changes are the decline in the equilibrium real interest rate, globalisation, digitalisation, changes in the financial system and climate change.
As part of this strategy, the Governing Council has set a 2% inflation target over the medium term. This 2% target is symmetric, meaning negative and positive deviations of inflation from the target are equally undesirable. The ECB Governing Council will therefore respond to any negative and positive deviations with its monetary policy toolkit.
The price index used by the ECB to measure inflation is the Harmonised Index of Consumer Prices (HICP), although the Governing Council has recognised that including the costs relating to owner-occupied housing in the HICP would better represent the inflation relevant for households. A roadmap to include these costs in the HICP has therefore been established.
The ECB's monetary policy strategy will be reviewed regularly to adapt it to future changes in the economy, and the current strategy is expected to be assessed in 2025.