17 Dec 2019

The Two-pillar Strategy of the ECB

Ready for a Review

Daniel Gros / Angela Capolongo

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Inflation has remained below the ECB’s own target of ‘below, but close to 2%’ for a long time despite massive doses of unconventional policies, suggesting that the present ‘two pillar’ strategy does not work. A review of the strategy will be useful only if it is entrusted to independent experts. Otherwise, it is likely to result in the finding that only marginal changes to the existing strategy are needed and that larger doses of the present policy will be sufficient to achieve the inflation target.

This document was provided by Policy Department A at the request of the Economic and Monetary Affairs (ECON) Committee.