Instead, the forward guidance of the Governing Council of the ECB is based on the long-term target of price stability according to which inflation in the medium-term is below but close to 2%. By doing so, the ECB Governing Council has managed to avoid some of the problems related to very precise numerical lift-off criteria. The ECB’s forward guidance has worked.
At the same time, it must be admitted that the prolonged period of lower-than-intended inflation, which is still ongoing, remains a cause for concern. This is one reason why the ECB reinforced its forward guidance with a comprehensive set of policy measures in March.