ECB monetary policy: Strategic review

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. The key change, after 18 months of consultation, was a new interpretation of price stability (the ECB's primary objective) as a symmetric inflation rate of 2 % over the medium term. The aim of this year's review was to adapt monetary policy and central banking to broader macroeconomic trends, such as digitalisation, globalisation and demographic change, while also giving consideration to the implications of climate change and the carbon transition, in line with the EU's climate goals and objectives. The result will have substantial implications for the primary objective (price stability), for the ECB's monetary policy assessment and for its monetary policy operational framework. In short, the revised monetary policy strategy brings the ECB's overall strategic orientation closer to its central bank peers, shifting away from curbing high inflation towards ensuring it does not dip too low, while also building climate considerations into the policy framework.