ECB includes house prices in inflation measure


Will wonders never cease. Via Goldman:

BOTTOM LINE: The Governing Council adopted a 2% inflation target in its strategy review and agreed that owner-occupied housing costs should be reflected in the HICP. Although the target is symmetric, the ECB signals tolerance to temporarily overshoot 2% inflation given the lower bound on interest rates, but does not call for make-up strategies. The strategy review included little news on the monetary policy instruments, stressing that policy rates remain the primary monetary policy instrument. The Governing Council agreed on a climate-related plan, incorporating climate factors in its monetary policy objective and adapting the design of its monetary policy operational framework.


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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.