ECB President Emphasizes Maintaining 2% Inflation Target: "No Changing Rules Mid-Game"

Fed Denies Possibility of Target Adjustment at Jackson Hole Meeting

Amid concerns that global inflation may remain at a high level, Christine Lagarde, President of the European Central Bank (ECB), reaffirmed her commitment to maintaining the existing 2% inflation target.

According to Bloomberg and other sources on the 25th (local time), Lagarde, attending the U.S. Federal Reserve (Fed) meeting held in Jackson Hole, Wyoming, denied the possibility of revising the inflation target when asked about it.

President Lagarde responded, "We are playing a game, and there are rules," adding, "You should not change the rules in the middle of the game."

[Image source=Reuters Yonhap News]

She emphasized that raising the inflation target could undermine efforts to anchor inflation expectations, and that anchoring expectations is the key to maintaining inflation control.

Some argue that if the central bank continues to raise the benchmark interest rate to curb inflation, problems may arise, and therefore the inflation target that the central bank aims to reach should be raised above the current 2%.

In this context, Lagarde’s stance aligns with the speech by Jerome Powell, Chair of the U.S. Federal Reserve, at the Jackson Hole meeting, in which he stated that the Fed will maintain its 2% inflation target.

In an interview with Bloomberg TV, Lagarde also said, "It is very important that inflation expectations remain anchored at 2%."

However, regarding the possibility of raising the Eurozone’s benchmark interest rate next month, she dismissed it by saying, "As it is becoming increasingly difficult to understand the economy due to broad structural changes, the ECB must make decisions cautiously and firmly based on data."

Meanwhile, in her speech that day, she warned that the rise of protectionism and the transition to green energy could increase inflation volatility and continue to exert price pressures due to changes in the way the global economy operates.

She said, “The new environment has created conditions where relative price shocks could be greater than before COVID-19,” adding, “It is unclear at this point whether these various changes are permanent, but it is clear from several cases that these effects have lasted longer than we expected.”

This content was produced with the assistance of AI translation services.