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The European Central Bank: the time is ripe for a major revision of its strategy

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  • Peter Bofinger

    (Julius-Maximilians-Universität Würzburg, Germany)

Abstract

A revision of the European Central Bank's (ECB) strategy is urgently needed. For the new strategy, it is important to define the inflation target explicitly in symmetrical terms. Environmental policy objectives can in principle be reconciled with the ECB's mandate as long as they do not conflict with the objective of monetary stability. An essential element of any strategy is a heuristic that makes it relatively easy for the public to monitor whether monetary policy decisions are in line with the mandate. Among the possible heuristics, monetary targeting and the Taylor rule have to be ruled out while ‘inflation targeting’ offers a relatively simple navigation system for monetary policy discussions.

Suggested Citation

  • Peter Bofinger, 2021. "The European Central Bank: the time is ripe for a major revision of its strategy," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 18(2), pages 163–176-1, September.
    • Handle: RePEc:elg:ejeepi:v:18:y:2021:i:2:p163-176
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    More about this item

    Keywords

    monetary policy; European Central Bank; monetary policy strategies; inflation targeting;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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