The review of the ECB’s monetary policy strategy was announced in January 2020 by its policy-making Governing Council and the results were due to be published by the end of last year. Not surprisingly, that deadline was missed. However, since then the review has been largely ignored by the markets, which have concentrated on the coronavirus pandemic, the ensuing global economic downturn, and more recently, the recovery from that slump and the prospect of rising inflation.
The ECB has already made clear that it has no intention of tightening policy near term, in line with other central banks that have described inflation as likely to be transient. The results of the review will likely reinforce that message by stating more formally that the ECB will tolerate inflation that it regards as temporary, and the Euro will likely ease further ahead of its publication as investors begin to focus on what it might say.
