Brussels: The European Central Bank announced Monday that it updated its monetary policy strategy, which will focus on agility and flexibility to counter major changes in the inflation environment.

According to Anadolu Agency, the bank kept its medium-term inflation target at 2%, as outlined in the latest five-year strategy assessment of the central bank. "The monetary policy strategy enables the Governing Council to respond effectively to major changes in the inflation environment," it stated in a release.

The bank emphasized that an effective response is crucial as ongoing structural shifts, such as geopolitical and economic fragmentation, increasing use of artificial intelligence, demographic change, and threats to environmental sustainability, suggest that the inflation environment will remain uncertain and potentially more volatile, with larger deviations from the 2% inflation target.

In the new strategy, it was noted that all monetary policy tools available to the Governing Council of the ECB will be utilized in the future, with a comprehensive review of their proportionality. "Their choice, design, and implementation will be sufficiently flexible to enable an agile response to changes in the inflation environment," the bank added.

ECB President Christine Lagarde highlighted the significance of the assessment, stating: "This assessment was a valuable opportunity to challenge our thinking, check our policy toolkit, and fine-tune our strategy. It provides us with an even stronger basis to conduct monetary policy and fulfill our mandate of price stability in an increasingly uncertain environment."

The ECB last revised its monetary policy strategy in 2021, during a prolonged period of low interest rates, and redefined the inflation target for the eurozone.