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NBS Governor comments on the ECB’s new monetary policy strategy

On 8 July 2021 the Governing Council of the European Central Bank (ECB) published its new monetary policy strategy, the result of an 18-month strategy review aimed at readying the ECB for future challenges.

It’s an evolution that was necessary, that we were looking for. The redesign of our strategy will enhance our abilities to guard and deliver on the primary objective – to maintain price stability in the euro area,” said Peter Kažimír, Governor of Slovakia’s central bank (NBS) and a Governing Council member.

The new strategy clearly states that stability is best maintained by aiming for 2 percent inflation. Our commitment to this target is symmetric, meaning the Governing Council considers negative and positive deviations from this target as equally undesirable.

Low inflation has become entrenched over the past few years and our revamped strategy says that we will not allow this to happen in the future. To achieve that also means, that inflation may sometimes moderately and temporarily be above 2 percent.

The policy objective is clear and simple. This clarity will strengthen our toolbox and enhance anchoring of inflation expectations as desired. Structural changes observed over the past two decades have had a major impact on the euro area economy, and this transformation is far from over.

Digitalisation, population ageing and significantly slower productivity growth, accompanied by the intensifying impacts of climate change, will test Europe’s resilience.

The review has also helped to better understand the significance of the incomplete institutional architecture in the euro area. This is a substantial constraint when it comes to absorbing the different shocks affecting our economy.

We will, within our mandate, do our part and help Europeans to adapt. Against the background of this profound transformation manifested in a low-interest rate environment, we had to respond boldly and robustly. This strategy is, in my view, a proper answer.

National Bank of Slovakia
Communications Section
Imricha Karvasa 1, 813 25 Bratislava, Slovak Republic

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