Core Viewpoint - The European Central Bank (ECB) has adjusted its monetary policy strategy to enhance communication in an increasingly unpredictable world, focusing on inflation and economic risks [1][2] Group 1: Strategy Adjustment - The ECB confirmed a symmetrical approach to maintain price growth at the target level in the medium term, indicating that significant and sustained deviations in either direction will prompt "appropriate and forceful or persistent policy responses" [1] - This adjustment marks a departure from the previous strategy, which emphasized "particularly forceful or sustained" actions when the economy was "close to the lower bound" to avoid entrenched low inflation [1] Group 2: Context and Rationale - The strategy adjustment was announced during the ECB's annual forum in Sintra, Portugal, in response to unprecedented inflation spikes in 2021 and 2022, which caught the ECB off guard and led to criticism regarding delayed interest rate hikes [1] - The evaluation aimed to prepare for a more frequent and disruptive economic shock environment due to factors like de-globalization, decarbonization, and demographic changes [1] Group 3: Forward-Looking Approach - ECB President Lagarde acknowledged that the previous assessment lacked foresight and was overly influenced by past experiences [2] - She emphasized that scenario analysis could have provided insights into the wide range of potential inflation outcomes during the rapid economic reopening in 2021, thereby reducing the risk of conveying false certainty to the public [2]