ECB adjusts forecast in line with new symmetrical inflation target

The European Central Bank, as expected, left interest rates and its asset purchase schedule unchanged on Thursday, while adjusting its policy forecast to bring it in line with its newly adopted inflation target. Earlier this month, the ECB completed a strategic review, adopting a symmetrical inflation target of 2% instead of its previous target of keeping inflation close to but just below 2%. In a statement following its policy meeting, the Governing Council said it expects “key ECB interest rates to remain at their current levels or below until that it sees inflation reaching 2% well before the end of its projection horizon and sustainably for the remainder of the projection horizon, and it judges that the progress made in terms of core inflation is sufficiently advanced to be compatible with a stabilization of inflation at 2% in the medium term. The ECB said this “may also involve a transitional period in which inflation is moderately above target.”