(Bloomberg) -- Benoit Coeure said the European Central Bank should clarify that it aims to achieve 2% inflation and argued in favor of a tolerance band around the goal.
In a farewell speech that prefigured an upcoming review of the institution's mission, the Executive Board member said it was time to “dismantle the absurd idea of an omnipotent central bank that can mechanically steer inflation.”
The ECB currently targets inflation of “below, but close to, 2%” -- a vague definition of price stability that some feel keeps expectations too low. Coeure signaled that he wants a more precise figure of exactly 2%, but with some flexibility.
Then policy makers “could communicate the range of inflation outcomes that can be considered acceptable in normal times,” he told the audience at an event held in his honor. He added that “such a tolerance band, which can be more or less precise, is not an invitation for inaction or complacency.”
Coeure also called for a regular reassessment of the official measure of inflation, including considering how to accurately reflect living costs such as housing.
To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow
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