Overview

• The ECB has finalised its strategy review, reiterating a symmetric two percent inflation target and pledging to respond forcefully to deviations in either direction.
• The review, concluded at the Sintra conference, acknowledges that the central bank was slow to counter rising inflation after autumn 2021 and schedules the next assessment for 2030.
• All existing monetary tools, from interest-rate adjustments to sovereign bond purchases, will remain available and be deployed with increased flexibility.
• The updated framework recognises that geopolitical tensions, digitalisation, artificial intelligence, demographic shifts and ecological risks are likely to drive greater price volatility.
• Critics including former ECB chief economist Otmar Issing warn that continued large-scale bond purchases risk creating fiscal dominance by tying monetary policy too closely to government financing.