Instead, I will focus on the questions surrounding the choice of target and the choice of instruments. The debate is, unsurprisingly, more advanced here in the U.S. than in Europe, given the stronger recovery and policy normalisation already under way. Logically, this raises questions about the future use of unconventional instruments and the efficiency of policy regimes to deal with a possible future recession.
The debate is embryonic in Europe, as the recovery remains moderate, with economic growth and inflation only recently starting to gain momentum. Furthermore, the debate will necessarily be more constrained given that the ECB’s hierarchical mandate, defined in primary law, confers absolute primacy to price stability over other secondary objectives.