Strategy
Main elements
The ECB’s monetary policy strategy provides a comprehensive framework within which decisions on the appropriate
level of short-term interest rates are taken. It is based on some general principles that aim to ensure a successful
conduct of monetary policy.
The ECB’s monetary policy strategy comprises
- a quantitative definition of price stability, and
- a two-pillar approach to the analysis of the risks to price stability.
The external communication of the strategy reflects the diversified approach to monetary policy that the ECB has adopted for its internal decision-making.
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Quantitative definition of price stability
The first element of the ECB’s strategy is a quantitative definition of price stability. The ECB’s Governing Council has
defined price stability as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%.
Price stability is to be maintained over the medium term.
The Governing Council has clarified that, in the pursuit of price stability,
it aims to maintain inflation rates below, but close to, 2% over the medium term.
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Two-pillar approach
In order to best serve its objective of maintaining price stability, the ECB, like any other central bank,
needs to thoroughly analyse economic developments.
The ECB's approach to organising, evaluating and cross-checking the information relevant for assessing the risks to
price stability is based on two analytical perspectives, referred to as the "two pillars": economic analysis
and monetary analysis. They form the basis for the Governing Council's overall assessment of the risks to price
stability and its monetary policy decisions.
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Communication
The strategy also provides a framework for explaining monetary policy decisions to the public in a clear
and transparent manner.
In this respect, a high degree of transparency does not only help the central bank to carry out its mandate more
effectively, but also to ensure accountability to the public.
Accountability and transparency
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Related publications
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Expectations and the conduct of monetary policy, ECB Monthly Bulletin article, May 2009,
pdf 282 kB,
en
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Price stability and growth, ECB Monthly Bulletin article, May 2008,
pdf 348 kB,
en
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Communicating monetary policy to financial markets, ECB Monthly Bulletin article, April 2007,
pdf 219 kB,
en
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Monetary Policy "Activism", ECB Monthly Bulletin article, November 2006,
pdf 219 kB,
en
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The predictability of the ECB's monetary policy. ECB Monthly Bulletin article, January 2006,
pdf 143 kB,
en
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Asset price bubbles and monetary policy, ECB Monthly Bulletin article, April 2005,
pdf 1.7 MB,
en
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The monetary policy of the ECB, Chapter 3, January 2004,
pdf 1.1 MB,
en
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Background studies for the ECB's evaluation of its monetary policy strategy, November 2003,
pdf 1.9 MB,
en
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The outcome of the ECB's evaluation of its monetary policy strategy.
ECB Monthly Bulletin article, June 2003,
pdf 1.3 MB,
en
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The two pillars of the ECB's monetary policy strategy.
ECB Monthly Bulletin article, November 2000,
pdf 838 kB,
en
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The stability-oriented monetary policy strategy of the Eurosystem.
ECB Monthly Bulletin article, January 1999,
pdf 605 kB,
en
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Related press releases
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The ECB's monetary policy strategy, Press release, 8 May 2003,
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A stability-oriented monetary policy strategy for the ESCB, Press Releases, 13 October 1998,
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