Investing.com -- The European Central Bank (ECB) is planning to reconsider its monetary-policy strategy. The aim is to enable more agile responses to price shocks amid an increasingly volatile global environment. ECB Governing Council members are expected to debate this potential shift during an informal retreat on May 6-7 in Porto, Portugal. This will be their first comprehensive discussion on an ongoing review of their strategy, according to a report from Bloomberg, citing individuals familiar with the preparations who wished to remain anonymous due to the confidential nature of the discussions.
During the retreat, the council members will evaluate reports from two work streams established specifically for this assessment. They will also consider the views of the Monetary Policy Committee, which includes top economists from the ECB and the euro zone’s 20 national central banks.
The ECB is striving to better equip itself for a future that is likely to present more frequent and disruptive economic shocks. The review, initiated last summer, is primarily focused on examining the outcomes of the central bank’s previous exercise of this type.
The last review, published in July 2021, was promptly challenged by an unprecedented surge in inflation. This unexpected event caught the ECB unprepared and led to criticism that officials were too slow in increasing interest rates, a fact that was also highlighted in the economists’ findings.
In recent times, the massive fluctuations in global markets, triggered by US President Donald Trump’s tariff policy, have underscored how rapidly the economic outlook can change. In this new era, politicians are more willing to intervene in the economy in increasingly dramatic ways. As a result, Europe’s prospects have been disrupted over the past few weeks, leaving officials uncertain about the future direction of inflation.
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