ECB should not only target inflation, Macron says

The European Central Bank should no longer focus solely on keeping inflation under control, French President Emmanuel Macron said on Thursday, urging it to adopt growth and decarbonisation targets as well. Any formal changes to broaden the ECB's mandate are likely to meet stiff resistance from other euro zone members, including Germany, where the targeting price stability is of paramount importance.

The European Central Bank should no longer focus solely on keeping inflation under control, French President Emmanuel Macron said on Thursday, urging it to adopt growth and decarbonisation targets as well.

Any formal changes to broaden the ECB's mandate are likely to meet stiff resistance from other euro zone members, including Germany, where the targeting price stability is of paramount importance. The ECB has long had a mandate to steer inflation towards a target of 2% over the medium-term whereas the U.S. Federal Reserve also aims to support maximum employment and moderate long-term interest rates.

"We can no longer have a monetary policy whose sole objective is inflation," Macron said in a wide-ranging speech on the European Union at the Sorbonne University in Paris. "We need to have a theoretical and political debate about how to include in the ECB's targets at least one for growth as well as for decarbonisation," Macron said.

He added that euro zone countries should consider giving the ECB a decarbonisation goal because shifting the economy towards emitting less carbon structurally added to price pressures. The ECB is already looking at ways of making its monetary policy greener, with debate revolving around buying bonds from less polluting companies and giving banks incentives to lend to such companies.

Policymakers are due to discuss the issue next month at a strategy review in Ireland.

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