European Central Bank policymakers held "heated discussions" last week about changing the bank's inflation target as part of a broader strategy review, Austria's central bank chief Robert Holzmann said on Wednesday.
The ECB launched its review last month, a deep dive into the bank's foray into unconventional policy following the euro zone debt crisis and the exercise is likely to bring a redefinition of its inflation target.
Although the discussion about the new target is only starting, initial statements from policymakers suggest it is likely to be set at 2%, a slight shift from its current definition of "below but close to 2%". Holzmann said it was likely to remain largely unchanged.
"Is our monetary policy target - (inflation of) just under 2% - where it should be? Should it be less, should it be more? Should it be symmetrical? Should it be asymmetrical? ... We had heated discussions about that last week in the (Governing) Council," Holzmann told an investment conference.
The biggest discussion in the review is likely to be on how much deviation from the target the ECB could tolerate and how to define the boundaries of this tolerance.
Some support the idea of a band around a target but others fear that such a mechanism could make the bottom of the band the de facto target, resulting in a lower inflation aim.
The ECB has undershot its target for the past seven years and its projections indicate that it will continue to miss for years to come.
Holzmann has said he prefers an inflation target of 1.5%, a point he repeated on Wednesday, arguing against colleagues who he said believe it is acceptable to keep the existing target while being happy with 1.5%.