Time to Untie the ECB’s Hands
The European Central Bank is now signaling its intention to end quantitative easing this year, indicating that it expects eurozone inflation to reach its target of "below, but close to, 2%." But as the ECB prepares for the next crisis, it would be well advised to revisit its longstanding price-stability objective.
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ZURICH – The European Central Bank’s recent announcement that it will try to end asset purchases by this December means that it has confidence in its ability to achieve price stability. But those who decided that price stability should be the ECB’s single, overriding policy goal may have shot themselves in the foot, not least by denying policymakers much-needed flexibility.