Frankfort: The European Central Bank has adopted a new approach to managing the economy that will allow banks to tolerate periods of inflation transactions moderately above their goals and to take greater stories about climate change in forecasting and stimulus programs.
The new strategy announced Thursday for 19 countries using the euro also recommended including home prices in the size of the UE inflation.
The key aspect is to replace the previous bank inflation destination “below but close to ” annual inflation of 2%.
The new target is described as 2%, but” symmetrical.
” That means it will allow “temporary period ‘of the target inflation above.
In theory, which will allow the bank to keep low interest rates and stimulus programs such as purchasing bonds with new money made for a longer period of time.
The bank said that Calculating the increase in house prices will represent more inflation.
Because it is relevant to households.
Including housing occupied by the owner in the EU inflation index will take years, therefore the bank said it planned to use the initial estimate of housing costs to increase steps Inflation.
The bank said it would do more to take the effects of climate change into its monetary policy, by saying that global warming could have a “big implication” for price stability.
It is said to expand its model and economic statistics to assess better effects that climate change can occur in the economy.
When buying bonds, the bank said it could consider whether the company issued bonds in accordance with the UE law that applied the 2015 Paris Climate Change Agreement.
Buying corporate bonds and the government is a tool used by banks to reduce loan costs for business, household and government budget , The bank’s mandate which was established in the basic EU Agreement was to pursue price stability.
After that it was reached, he could pursue other objectives that were consistent with EU economic policies.
The bank said it would implement a new strategy begins with the next meeting on July 22.