ECB Economic Bulletin: Governing Council Committed to Reaching 2% Inflation Target

Highlights

• Anticipated sustained high inflation in the Euro Zone.

• ECB officials are striving to reduce inflation to 2%.

• Interest rates are set to stay elevated, with no expected rate reduction until inflation reaches an acceptable level.

ECB Maintains Unchanged Interest Rates The Governing Council opted to keep the three key ECB interest rates at their current levels during the meeting on October 26.

Anticipated Persistence of Elevated Inflation The recently received data has broadly reaffirmed the Governing Council’s previous evaluation of the medium-term inflation outlook. Inflation is projected to persist at levels considered excessively high for an extended period, with strong domestic price pressures still present.

ECB Targets 2% Inflation Goal The Governing Council is unwavering in its commitment to ensuring the return of inflation to its 2% medium-term target in a timely manner. According to their current assessment, the Council deems that the current interest rates, sustained for a sufficient duration, will significantly contribute to the timely achievement of the inflation target.

Prolonged Elevation of Rates Until Inflation Objectives Are Attained The Governing Council’s forthcoming decisions will ensure that the key ECB interest rates will be set at levels deemed adequately restrictive for as long as necessary in order to ensure the timely return of inflation to the target. The Council will continue to employ a data-dependent approach to determine the appropriate degree and duration of constraint.

Preparedness to Utilize All Instruments to Address Inflation The Governing Council is prepared to adjust all of its available tools within its mandate to guarantee the return of inflation to its medium-term target and to uphold the effective functioning of monetary policy transmission.