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2026-02-20 20:55:35
[Inflation Target Deviation Reveals: Which ECB Presidents Best Met the Mission of Price Stability?] ⑴ Which ECB president has been best at safeguarding price stability? Using the deviation from the inflation target as a benchmark, the answer may differ from common market perception. Based on calculations of the difference between the Eurozone HICP's monthly year-on-year data and the central bank's inflation target, the first president, Wim de Isenberg, had the best performance, while the current president, Christine Lagarde, has the worst record. ⑵ The ECB's definition of price stability has evolved three times. From its inception until May 2003, the target was an inflation rate below 2%. From then until July 2021, it was adjusted to below but close to 2%, which the market generally interprets as around 1.8%. After July 2021, the target was officially established as a symmetrical 2%. ⑶ Calculating monthly deviations based on the targets for each period, de Isenberg's term showed the smallest average deviation. For most of his term, inflation data met the requirement of being below the 2% target, providing a structural advantage to his record. (4) The average deviation during Lagarde's term was the most significant, even comparable to the impact of the inflation peak three years ago. This deviation is more than double the current inflation target. The main reason is that after inflation exceeded 2% in July 2021, the ECB Governing Council waited a full year before raising the policy rate from negative territory. (5) The performance of Jean-Claude Trichet and Mario Draghi's terms falls somewhere in between. Although the 16% appreciation of the euro during Trichet's term is considered by some market observers as the best indication of a president's leadership, from the perspective of the price stability mandate, his deviation from the inflation target was not optimal. (6) It should be noted that monetary policy is formulated jointly by the entire Governing Council, and attributing inflation deviation entirely to any one president is biased. However, this calculation does provide a unique quantitative perspective for assessing the policy outcomes during the terms of previous presidents.
