Introduction

Primary objective

The primary objective of the ECB’s monetary policy is to maintain price stability. This is the best contribution monetary policy can make to economic growth and job creation.

What does monetary policy do?

Monetary policy operates by steering short-term interest rates, thereby influencing economic developments, in order to maintain price stability for the euro area over the medium term.

The ECB's monetary policy strategy

The ECB has adopted a specific strategy to ensure the successful conduct of monetary policy. The ECB 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%. In the pursuit of price stability, the ECB aims at maintaining inflation rates below, but close to, 2% over the medium term.

The strategy also includes an analytical framework for the assessment of all relevant information and analysis needed to take monetary policy decisions. This framework is based on two pillars: economic analysis and monetary analysis.

Monetary policy strategy

Decisions

Monetary policy decisions are taken by the ECB's Governing Council. The Council meets every month to analyse and assess economic and monetary developments and the risks to price stability and to decide on the appropriate level of the key interest rates, based on the ECB's strategy.

Monetary policy decisions
Economic and monetary developments

Implementation

To implement its monetary policy decisions, the Governing Council of the ECB has adopted a set of monetary policy instruments and procedures as laid down in the General documentation on Eurosystem monetary policy instruments and procedures.

Monetary policy instruments