(Bloomberg) -- Bundesbank President Jens Weidmann said the European Central Bank won’t deliberately seek higher inflation rates to make up for previous undershoots, a day after it settled on a new strategy that implies price growth can exceed its target.
The ECB raised its inflation goal to 2% on Thursday after an 18-month debate and acknowledged that temporary overshoots might occur when interest rates are near their lower limit, as now.
In the run-up to the announcement, economists and investors speculated over whether the central bank would emulate the Federal Reserve in embracing average inflation targeting, which would mean automatic overshooting after periods of weakness.
“We are not striving for either lower or higher rates,” Weidmann said, in one of the first reactions from within the Governing Council to the outcome of the ECB’s strategy review. “That was important to me.”
The German central banker said it the new 2% target of an inflation rate of 2% in the medium term is a “clear and easily understandable objective.”
“Temporary deviations from the target in either direction can occur,” he said. “However, we do not make our monetary policy contingent on targets not met in the past.”
He also welcomes the ECB’s decision to include climate-change criteria into its decision-making.
“Climate change and climate protection will play a significant role in how we fulfil our mandate,” he said. “It is correct for us to take, in particular, the financial risks deriving from climate change and climate policy as a starting point, to call for the disclosure of the necessary information, and to improve our risk management framework.”
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