TY - UNPD A1 - Wieland, Volker T1 - The decline in euro area inflation and the choice of policy strategy T2 - Working paper series / Institute for Monetary and Financial Stability ; 159 N2 - This note argues that the European Central Bank should adjust its strategy in order to consider broader measures of inflation in its policy deliberations and communications. In particular, it points out that a broad measure of domestic goods and services price inflation such as the GDP deflator has increased along with the euro area recovery and the expansion of monetary policy since 2013, while HICP inflation has become more variable and, on average, has declined. Similarly, the cost of owner-occupied housing, which is excluded from the HICP, has risen during this period. Furthermore, it shows that optimal monetary policy at the effective lower bound on nominal interest rates aims to return inflation more slowly to the inflation target from below than in normal times because of uncertainty about the effects and potential side effects of quantitative easing. T3 - Working paper series / Institute for Monetary and Financial Stability - 159 Y1 - 2021 UR - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/61766 UR - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-617669 UR - https://www.imfs-frankfurt.de/forschung/imfs-working-papers/details/publication/the-decline-in-euro-area-inflation-and-the-choice-of-policy-strategy.html PB - Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability CY - Frankfurt am Main ER -