Mücahithan Avcıoğlu
30 June 2025•Update: 01 July 2025
ISTANBUL
The European Central Bank announced Monday that it updated its monetary policy strategy, which will focus on agility and flexibility to counter major changes in the inflation environment.
The bank kept its medium-term inflation target at 2%, according to the latest five-year strategy assessment of the central bank.
"The monetary policy strategy enables the Governing Council to respond effectively to major changes in the inflation environment," it said in a statement.
The bank stated that the effective response is especially important as ongoing structural shifts, such as geopolitical and economic fragmentation, increasing use of artificial intelligence, demographic change, and the threat to environmental sustainability, suggest that the inflation environment will remain uncertain and potentially more volatile, with larger deviations from the 2% inflation target.
In the new strategy, it was stated that all monetary policy tools available to the Governing Council of the ECB will be utilized in the future and that their use will continue to be comprehensively reviewed in terms of proportionality.
"Their choice, design, and implementation will be sufficiently flexible to enable an agile response to changes in the inflation environment," the bank said.
ECB President Christine Lagarde said: "This assessment was a valuable opportunity to challenge our thinking, check our policy toolkit, and fine-tune our strategy. It provides us with an even stronger basis to conduct monetary policy and fulfill our mandate of price stability in an increasingly uncertain environment."
The ECB last revised its monetary policy strategy in 2021, against the backdrop of a prolonged period of low interest rates, and redefined the inflation target for the eurozone.
The ECB is planning its next strategic review in 2030.
