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Illustration: Sarah Grillo/Axios

The European Central Bank [ECB] is the oldest inflation target in the world, and certainly the one that carries the most political baggage. This week, with very little fanfare, it changed dramatically.

Background: Germany's Bundesbank implemented an inflation target in 1975 — a full 15 years before New Zealand's target was formally adopted. Germany's target started at 4.5%, but it rapidly fell to 2% in 1987, and was never subsequently changed.

  • Over the course of the postwar era, Germany's strong currency and low inflation played a proud and central role in the country's national identity. That was all thanks to the Bundesbank, which had one primary function — to safeguard the currency. Germany's target wasn't enshrined in law, like New Zealand's was, but it helped to shape a nation.
  • When the Deutsche mark was replaced by the euro, the ECB inherited the Bundesbank's 2% inflation target. That target, then, has now been in place for 32 years.

For all those 32 years, the inflation target has been a ceiling: The aim of the central bank was to get inflation down to 2% or lower. If inflation in Germany was 3%, that marked a failure on the part of the Bundesbank. If inflation was 1%, that was fine.

Driving the news: The official ECB statement accompanying its latest monetary policy decision this week included an important new word. "If the medium-term inflation outlook continues to fall short of our aim," it says, "the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim."

What they're saying:

"The symmetry means basically that there is no cap, or 2% cap, and that inflation can deviate on both sides. We don't accept permanently lower inflation rates,"
— Draghi, in his post-meeting press conference.

No Bundesbank president would ever have said something like "We don't accept permanently lower inflation rates." Quite the opposite. Permanently lower inflation rates were the German central bank's stated aim, and the ECB largely inherited that aim. That's now, officially, a thing of the past.

Why it matters: ECB president Mario Draghi is painfully aware that ultra-loose monetary policy — like the deposit rate of -0.4%, which still has the power to startle — has done little to spark inflation in the eurozone. He knows too that his successor, Christine Lagarde, will need to use all her political skills to cajole Europe's governments into providing fiscal support for her monetary actions. With this action, he has given Lagarde all the headroom she needs to keep monetary policy as loose as she possibly can, even if inflation exceeds the 2% target.

Go deeper: More negative interest rates won't save Europe

Go deeper

Scoop: Trump-backed Perdue says he wouldn’t have certified Georgia 2020 results

Perdue at a December 2020 campaign event in Columbus, Ga. Photo: Elijah Nouvelage/Getty Images

Georgia gubernatorial candidate David Perdue wouldn’t have signed the certification of the state’s 2020 election results if he had been governor at the time, the former Senate Republican told Axios.

  • “Not with the information that was available at the time and not with the information that has come out now. They had plenty of time to investigate this. And I wouldn’t have signed it until those things had been investigated and that’s all we were asking for," he said.

Why it matters: There has been no evidence widespread fraud took place in Georgia's elections last year and the November results were counted three times, once by hand.

Beijing Olympics: These countries have announced diplomatic boycotts

Photo: Zhang Qiang/VCG via Getty Images

Several countries, including Canada and Australia, have announced they will join the U.S. in a diplomatic boycott of the 2022 Beijing Winter Olympics to protest human rights abuses committed by China's government.

Driving the news: Leaders have faced pressure from human rights groups and others to boycott the Games, pointing to the ongoing genocide of Uyghurs and other Muslim minorities in China's Xinjiang region and other abuses.

Biden directs federal government to become carbon neutral by 2050

President Biden speaking to reporters outside of the White House on Dec. 8.

President Biden signed an executive order Wednesday that requires the federal government achieve multiple goals related to reducing its carbon emissions, including achieving net-zero emissions by 2050.

Why it matters: Meeting the objectives of the order would require a massive investment by the federal government to buy electric vehicles, upgrade buildings and change how it procures electricity.