European Central Bank: The inflation target should be similar and flexible

Francois Villeroy de Gallhau, the European Central Bank’s policymaker, said in a speech at the University of Paris Dauphin that the inflation target of the European Central Bank must be symmetrical, flexible and reliable with the general public, not just financial markets.

For most of the past decade, inflation in the euro area has been below the current target at a rate close to less than 2% in the medium term, prompting new European Central Bank President Christine Lagarde to start reviewing the target.

He added that the European Central Bank cannot just take inflation expectations into financial markets into account and needs to focus more on what families and companies think because it sets prices and wages. Under Mario Draghi, the European Central Bank has largely focused on market measures of future inflation expectations.