tweet at 3:28am: ECB’s Lagarde: Low Inflation Poses Fundamental Challenges tweet at 3:32am: ECB’s Lagarde: To Underpin Inflation Expectations, We Need To Ensure That Our Aim Is Perceived To Be Symmetric By The Public Both Policies Must Remain Expansionary For As Long As Necessary To Achieve Their Respective Goals. The economic policy strategy review: some preliminary concerns Thank you for inviting me to tackle this conference. Since 2003, after we last carried out a technique review, the euro area and the realm economic system have gone through profound adjustments. The consensus that has ruled financial policy around the globe has been challenged on a couple of fronts.
Most importantly, the last decade has been defined by a continual decline in inflation among superior economies. In the euro area, annual inflation averaged 2. 3% from 1999 to the eve of the great financial crisis in August 2008, but only 1. 2% from then until the end of 2019. This environment poses fundamental questions for central banks.
We wish to entirely examine the forces which are driving inflation dynamics today, and accept as true with no matter if and how we must always adjust our policy strategy in response. Now is the time for listening and reflecting. But I will discuss the most issues we are looking at and some of the key questions we will be asking. In my remarks today I will cover three topics: first, the definition of our inflation goal; second, the dating between inflation and the genuine economic system; and third, the transmission and effectiveness of economic policy. None of these issues can be regarded in isolation and we want a well rounded view of all facets so as to draw conclusions for the approach review.