The ECB’s Review of its Monetary Policy Strategy

Giuseppe Corbisiero and Neil Lawton
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Giuseppe Corbisiero: Central Bank of Ireland
Neil Lawton: Central Bank of Ireland

Quarterly Bulletin Articles, 2021, 70-103

Abstract: On 8 July 2021, the ECB’s Governing Council concluded the review of its monetary policy strategy. The ECB’s monetary policy strategy outlines how the central bank operates in order to meet its primary mandate of price stability. A monetary policy strategy imposes a clear structure and framework on the policy-making process itself, ensuring that policy makers have all the necessary information and analyses required to take decisions. It is also a vehicle for explaining monetary policy decisions to foster accountability and transparency. The main outcomes from the review include: an updated symmetric inflation target of two percent in the pursuit of price stability; a new integrated analytical framework to aid monetary policy decision making; a recommendation to include the cost of owner-occupied housing into the measure of consumer prices, namely the Harmonised Index of Consumer Prices; a plan to incorporate climate change into the ECB’s monetary policy framework; plans to improve communication with the public; and a commitment to more regular reviews of the monetary policy strategy. The outcomes of the review will guide monetary policy decision-making in the euro area going forward.

Date: 2021-10
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