European monetary policy

01-02-2018

The European System of Central Banks (ESCB) comprises the ECB and the national central banks of all the EU Member States. The primary objective of the ESCB is to maintain price stability. In order to achieve its primary objective, the Governing Council of the ECB bases its decisions on a two-pillar monetary policy strategy and implements them using both standard and non-standard monetary policy measures. The main instruments of ECB standard monetary policy are open market operations, standing facilities and the holding of minimum reserves. As a response to the financial crisis, the ECB has also changed its communication strategy by providing forward guidance on the future path of the ECB’s interest rate policy conditional on the outlook for price stability and has taken a number of non-standard monetary policy measures. These include the purchases of assets and sovereign bonds on the secondary market, with the aim of safeguarding price stability and the effectiveness of the monetary policy transmission mechanism.

The European System of Central Banks (ESCB) comprises the ECB and the national central banks of all the EU Member States. The primary objective of the ESCB is to maintain price stability. In order to achieve its primary objective, the Governing Council of the ECB bases its decisions on a two-pillar monetary policy strategy and implements them using both standard and non-standard monetary policy measures. The main instruments of ECB standard monetary policy are open market operations, standing facilities and the holding of minimum reserves. As a response to the financial crisis, the ECB has also changed its communication strategy by providing forward guidance on the future path of the ECB’s interest rate policy conditional on the outlook for price stability and has taken a number of non-standard monetary policy measures. These include the purchases of assets and sovereign bonds on the secondary market, with the aim of safeguarding price stability and the effectiveness of the monetary policy transmission mechanism.