ECB to Raise Inflation Goal to 2%, Sources Say

The video discusses changes in the European Central Bank's (ECB) inflation target, shifting from a cap of below but close to 2% to a more flexible 2% target. This change allows for overshooting when necessary, potentially leading to looser monetary policy. The ECB's approach is compared to the Federal Reserve's average inflation targeting. The video also anticipates the ECB's strategic review, which may address climate change and revise the inflation measure to better account for homeownership costs.

What is the new inflation target set by the ECB?

• Below 1.5%

• Exactly 2%

• Below but close to 2%

• 2% with flexibility to overshoot

Why was the old inflation target seen as problematic by some policymakers?

• It was too high

• It was not flexible enough

• It led to premature tightening of monetary policy

• It was not clearly defined

How does the Federal Reserve's approach to inflation targeting differ from the ECB's?

• The Fed targets below but close to 2%

• The Fed does not have an inflation target

• The Fed uses average inflation targeting

• The Fed targets exactly 1.5%

What is a key aspect of the ECB's upcoming strategic review?

• Reducing interest rates

• Incorporating climate change into monetary policy

• Increasing the inflation target to 3%

• Eliminating the inflation target

What potential change in the inflation measure is the ECB considering?

• Including the cost of homeownership

• Targeting a fixed basket of goods

• Excluding food prices

• Focusing only on energy prices