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Published as part of the ECB Economic Bulletin, Issue 5/2021. 1 Introduction. The new monetary policy strategy of the European Central Bank (ECB) was published on 8 July 2021. While the mandate is conferred upon the ECB by the Treaties, the ECB has to devise its monetary policy strategy.
- Monetary Policy
Our monetary policy influences how much you have to pay to...
- European Monetary Policy
Overview. In October 1998, the ECB Governing Council agreed...
- Monetary Policy
- The Shocks Hitting The Euro Area Economy
- The Persistence of Inflation
- The ECB’s Monetary Policy Response
- Conclusion
In our monetary policy strategy, the appropriate response to a deviation of inflation from our target depends on three factors: the source, size and persistence of that deviation. Typically, when the source of an inflationary shock is stemming mainly from demand, monetary policy will respond proactively to prevent the economy from overheating. And ...
Collectively, these shocks have pushed inflation a long way from our target. Headline inflation – which was negative as recently as December 2020 – has risen by 9.4 percentage points from its trough during the pandemic to its peak last month. Core inflation has risen by 4.1 percentage points. In the recent past, elastic global supply has meant that...
So, to sum up, we are currently facing a situation where lingering supply constraints are an important factor causing above-target inflation to persist for longer – and their effect is being exacerbated by the release of pent-up demand. In this setting, monetary policy needs to avoid deviations from our target becoming entrenched and return inflati...
Let me conclude. Inflation in the euro area has proven to be much higher and more persistent than originally projected. This reflects the unprecedented series of shocks we have faced, and the fact that those shocks have led to turning points in our economic environment. Monetary policy cannot prevent the first-round effects of many of these shocks....
In July 2021, the European Central Bank (ECB), the central bank of the 19 European Union countries that have adopted the euro, completed its first monetary policy strategic review for 18 years.
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The ECB Governing Council makes monetary policy for the Eurozone and the European Union, administers the foreign exchange reserves of EU member states, engages in foreign exchange operations, and defines the intermediate monetary objectives and key interest rate of the EU.
The European Central Bank (ECB) manages the euro and frames and implements EU economic & monetary policy. Its main aim is to keep prices stable, thereby supporting economic growth and job creation. What does the ECB do?
