SPEECH
4 July 2025
Nature degradation – a threat to the economy
The climate crisis and nature degradation are a serious threat to the economy, says Frank Elderson at the IMF/WBG Constituency Meeting. Nature degradation is now included in our monetary policy 2025 strategy statement, reflecting our commitment to data and evidence-based decision-making.
Read Frank Elderson’s speech
ACCOUNT
3 July 2025
Account of the June monetary policy meeting
The Governing Council decided to cut interest rates. Members reiterated that the Governing Council remained determined to ensure that inflation would stabilise sustainably at its 2% medium-term target.
Read the account
THE ECB BLOG
8 July 2025
Is the EU trading with dictators? A review
Over the last 25 years the EU’s trading partners have become less democratic, contrary to the required values-based trade policy. The ECB Blog investigates the background of this development and the dynamics at play.
Read The ECB Blog- 4 July 2025
- MFI INTEREST RATE STATISTICS
- 3 July 2025
- MONETARY POLICY ACCOUNTRelated
- 5 June 2025
- MONETARY POLICY DECISIONEnglishOTHER LANGUAGES (23) +
- 3 July 2025
- EURO AREA ECONOMIC AND FINANCIAL DEVELOPMENTS BY INSTITUTIONAL SECTOR (EARLY)
- 3 July 2025
- BALANCE OF PAYMENTS (QUARTERLY)
- 1 July 2025
- WEEKLY FINANCIAL STATEMENTEnglishOTHER LANGUAGES (22) +Annexes
- 1 July 2025
- WEEKLY FINANCIAL STATEMENT - COMMENTARY
- 4 July 2025
- Welcome address by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the International Monetary Fund OEDNE/World Bank Group EDS19 Constituency Meeting
- 30 June 2025
- Introductory speech by Christine Lagarde, President of the ECB, at the opening reception of the ECB Forum on Central Banking 2025 "Adapting to change: macroeconomic shifts and policy responses"
- 30 June 2025
- Christine Lagarde, President of the ECB, Philip R. Lane, Member of the Executive Board of the ECB
- 27 June 2025
- Speech by Piero Cipollone, Member of the Executive Board of the ECB, at the BIS Annual General Meeting
- 26 June 2025
- Opening speech by Christine Lagarde, President of the ECB, at the 150th anniversary of the Münchner Opernfestspiele
- 16 June 2025
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Balázs Korányi and Francesco Cánepa on 12 June 2025
- 14 June 2025
- Interview with Christine Lagarde, President of the ECB, conducted by Su Liang on 12 June 2025
- 27 May 2025
- Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Christian Siedenbiedel on 20 May 2025
- 27 May 2025
- Interview with Luis de Guindos, Vice-President of the ECB, conducted by Leonidas Stergiou on 21 May 2025
- 18 May 2025
- Interview with Christine Lagarde, President of the ECB, conducted by Marie-Pierre Gröndahl on 8 May 2025
- 8 July 2025
- Over the last 25 years the EU’s trading partners have become less and less democratic. The ECB Blog investigates the background of this development and the dynamics at play.Details
- JEL Code
- F10 : International Economics→Trade→General
- 3 July 2025
- European and national authorities have joined forces with banks to integrate reporting requirements across Europe. This will reduce costs for banks and improve data quality. In this blog post we describe the European integrated reporting initiative and present some initial results.Details
- JEL Code
- G20 : Financial Economics→Financial Institutions and Services→General
- 27 June 2025
- There is now an urgent need to channel retail savings into European capital markets in order to develop those markets and finance EU priorities. In this edition of the ECB Blog, we show that an EU savings standard could increase retail participation in the capital markets, benefiting savers, boosting investment in EU companies and supporting strategic priorities.[1]Details
- JEL Code
- G15 : Financial Economics→General Financial Markets→International Financial Markets
- 20 June 2025
- Memories of hyperinflation live on in public debates on money. In the case of Germany, the trauma of 1923 is widely seen as the source of the country’s preference for fiscal discipline and stability-oriented central banking. Historical analysis sheds new light on the collective memory and its genesis.Details
- JEL Code
- B29 : History of Economic Thought, Methodology, and Heterodox Approaches→History of Economic Thought since 1925→Other
- 17 June 2025
- For the euro to reach its full potential, Europe must strengthen three foundational pillars: geopolitical credibility, economic resilience and legal and institutional integrity.
- 7 July 2025
- GOVERNING COUNCIL STATEMENT
- 7 July 2025
- SURVEY OF MONETARY ANALYSTS
- 7 July 2025
- OTHER PUBLICATION
- 4 July 2025
- WORKING PAPER SERIES - No. 3071Details
- Abstract
- We provide estimates of profit shifting for over 2 million firm-year observations in 100 countries over the period 2009–2020. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine how the profits of both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key advantage of this approach is that it yields firm-year estimates of profit shifting. Multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate tax-haven owner exhibit the largest profit response to tax incentives. Our new database opens important avenues for analyzing the sources and effects of profit shifting.
- JEL Code
- F23 : International Economics→International Factor Movements and International Business→Multinational Firms, International Business
H25 : Public Economics→Taxation, Subsidies, and Revenue→Business Taxes and Subsidies
H26 : Public Economics→Taxation, Subsidies, and Revenue→Tax Evasion
H32 : Public Economics→Fiscal Policies and Behavior of Economic Agents→Firm
M41 : Business Administration and Business Economics, Marketing, Accounting→Accounting and Auditing→Accounting
- 4 July 2025
- WORKING PAPER SERIES - No. 3070Details
- Abstract
- We show that in a canonical model with heterogeneous entrepreneurs, financial frictions, and an imperfectly elastic supply of capital, a fall in the interest rate has an ambiguous effect on aggregate economic activity. In partial equilibrium, a lower interest rate raises aggregate investment both by relaxing financial constraints and by prompting relatively less productive entrepreneurs to invest. In general equilibrium, however, this higher demand for capital raises its price and crowds out investment by more productive entrepreneurs. When this reallocation is strong enough, a fall in the interest rate reduces aggregate output. A numerical exploration of the model suggests that this reallocation effect i s quantitatively significant an d – in response to persistent changes in th e interest rate – stronger than the traditional balance-sheet channel. We provide evidence of the reallocation effect using US firm-level data.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E23 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Production
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 4 July 2025
- TARGET SERVICES ANNUAL REPORT
- 3 July 2025
- WORKING PAPER SERIES - No. 3069Details
- Abstract
- In this event study, we analyze the effect of market segmentation on stock returns in Europe amid extreme weather events. We show that local institutional ownership (LIO) mitigates the negative effect of the uncertainty from the occurrence of extreme weather events on stock prices. We assess firms’ exposure to physical climate risks using the Eurosystem’s method that uses physical climate risk indicators. In a sample with materially exposed industries, we find a negative risk-adjusted abnormal return of 99 basis points for storms on the event date. This negative return is mitigated however by 1.3% for each percentage point increase in LIO. We confirm the mitigating role of LIO by testing the information hypothesis through two channels: the distance between a firm’s headquarters and the affected facility and its exposure to physical risk.
- JEL Code
- C81 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs→Methodology for Collecting, Estimating, and Organizing Microeconomic Data, Data Access
G11 : Financial Economics→General Financial Markets→Portfolio Choice, Investment Decisions
G14 : Financial Economics→General Financial Markets→Information and Market Efficiency, Event Studies, Insider Trading
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
- 2 July 2025
- WORKING PAPER SERIES - No. 3068Details
- Abstract
- We characterize optimal monetary policy under state-dependent pricing. The framework gives rise to nonlinear inflation dynamics: The flexibility of the price level increases after large shocks due to an endogenous rise in the frequency of price changes. In response to large cost-push shocks, optimal policy leverages the lower sacrifice ratio to curb inflation. When faced with total factor productivity shocks, an efficient disturbance, the optimal policy commits to strict price stability. The optimal long-run inflation rate is just above zero.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy - Network
- Challenges for Monetary Policy Transmission in a Changing World Network (ChaMP)
- 1 July 2025
- WORKING PAPER SERIES - No. 3067Details
- Abstract
- This paper investigates the impact of foreign exchange (FX) shocks on income inequality across 31 European countries from 2003 to 2021. Leveraging a unique database of household-level longitudinal data from the European Union Statistics on Income and Living Conditions (EU-SILC) and exchange rate data from the Bank of International Settlements, we investigate how currency devaluations and appreciations influence income distribution. Our findings indicate that a 1% currency devaluation decreases income inequality by 15 basis points within one year, while appreciations have the reverse effect. Contrary to previous studies focused on Latin America, which credit reductions in inequality to both labor mobility and union influence, our analysis identifies labor mobility as the primary factor in Europe. Furthermore, we discover that income changes are predominantly driven by variations in income per hour rather than hours worked.
- JEL Code
- F31 : International Economics→International Finance→Foreign Exchange
F41 : International Economics→Macroeconomic Aspects of International Trade and Finance→Open Economy Macroeconomics
F44 : International Economics→Macroeconomic Aspects of International Trade and Finance→International Business Cycles
- 1 July 2025
- WORKING PAPER SERIES - No. 3066Details
- Abstract
- This paper studies how Treasury market dynamics depend on adjustments to the central bank balance sheet. We introduce a dynamic model of Treasury bonds with traditional and shadow banks. In the model, both Treasury and repo market disruptions arise as a joint consequence of three frictions: (i) balance sheet costs,(ii) intraday reserves requirements, and (iii) imperfect substitutability between repo and bank deposits. Our model highlights the critical role of both sides of the central bank’s balance sheet as well as agents’ anticipation of shocks and policy interventions in matching observed market dynamics.
- JEL Code
- E43 : Macroeconomics and Monetary Economics→Money and Interest Rates→Interest Rates: Determination, Term Structure, and Effects
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates - Network
- ECB Lamfalussy Fellowship Programme
- 1 July 2025
- OTHER PUBLICATIONAnnexes
- 1 July 2025
- OTHER PUBLICATION
- 1 July 2025
- OTHER PUBLICATION
- 30 June 2025
- OCCASIONAL PAPER SERIES - No. 372Details
- Abstract
- This report focuses on the implications of the changed inflation environment for the ECB’s monetary policy strategy, including the lessons learned from both the low inflation and high inflation periods, and the transition from one to the other. The starting point of the report is the outcome of the Monetary Policy Strategy Review 2020-21. While the previous review was conducted in an economic environment of low inflation, with interest rates in proximity to the effective lower bound (ELB), the inflation surge that followed the COVID-19 pandemic underscores the importance of a monetary policy strategy that enables the Governing Council to effectively respond to major changes in the inflation environment.
- 30 June 2025
- OCCASIONAL PAPER SERIES - No. 371Details
- Abstract
- This report offers a strategic view on the economic and inflation environment in the euro area as part of the monetary policy strategy assessment 2025. It reassesses the factors shaping the inflation and economic environment in light of the recent inflation experience, analyses changes in structural factors and examines the implications for the inflation environment the ECB is likely to face. It also draws conclusions regarding the enhancements that need to be made to the existing analytical toolkit and inflation forecasting.
- 30 June 2025
- STRATEGY REVIEWEnglishOTHER LANGUAGES (23) +
- 30 June 2025
- STRATEGY REVIEW
- 30 June 2025
- WORKING PAPER SERIES - No. 3065Details
- Abstract
- We analyze the international dimension of repo markets using novel euro area regulatory microdata. Our findings highlight the deep integration of funding markets across the Atlantic and the US dollar’s outsized role. Our paper documents five key facts: (1) US dollar repos by euro area entities account for approximately 40% of total volumes and are comparable in size to euro repos; (2) term repos (with maturities beyond one day) are quantitatively more relevant than commonly thought, especially non-centrally cleared ones; (3) repo markets have become more collateral-driven, involving diverse nonbank financial players and trading motives; (4) banks’ intragroup transactions form a large share of non-centrally cleared volumes; and (5) haircuts, even for riskier collateral, are often zero or negative, especially in euro trades. We show in two empirical applications that US monetary policy shocks spill over to euro repo rates and that negative haircuts arise from market power and collateral demand dynamics.
- JEL Code
- G12 : Financial Economics→General Financial Markets→Asset Pricing, Trading Volume, Bond Interest Rates
G14 : Financial Economics→General Financial Markets→Information and Market Efficiency, Event Studies, Insider Trading
- 30 June 2025
- WORKING PAPER SERIES - No. 3064Details
- Abstract
- We provide novel evidence on the supply-side transmission of monetary policy through a floating-rate channel. After a rate hike, firms with floating-rate loans keep prices elevated to offset higher borrowing costs, thereby reducing the effectiveness of monetary policy. Using monthly data on product-level prices, industry-level inflation rates and the euro-area credit register from 2021 to 2023, we find that the short-run impact of monetary tightening on inflation is 50% smaller when firms rely on floating-rate loans. This effect is stronger for firms that rely more on working capital to finance production and when they can easily pass on higher prices to their sticky customerbase (customer capital). Since firms with floating-rate loans face an increase in their financial burden, their loan terms are more frequently renegotiated, often resulting in reduced spreads and a shift from floating to fixed rates. Overall, if firms across the euro area had a lower reliance on floating-rate loans, inflation would have been 0.8 percentage points lower in 2022-2023.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages - Network
- Challenges for Monetary Policy Transmission in a Changing World Network (ChaMP)
- 26 June 2025
- LETTERS TO MEPS
- 26 June 2025
- WORKING PAPER SERIES - No. 3063Details
- Abstract
- This study involves tasking ChatGPT with classifying an “activity sentiment score” based on PMI news releases. It explores the predictive power of this score for euro area GDP nowcasting. We find that the PMI text scores enhance GDP nowcasts beyond what is embedded in ECB/Eurosystem Staff projections and Eurostat’s first GDP estimate. The ChatGPT-derived activity score retains its significance in regressions that also include the composite output PMI diffusion index. GDP nowcasts are significantly enhanced with PMI text scores even when accounting for methodological variations, excluding extraordinary economic events like the pandemic, and for different GDP growth quantiles. However, the forecast gains from the enhancement of GDP nowcasts with ChatGPT scores are time dependent, varying by calendar years. Sizeable forecast gains of on average about 20% were obtained apart from the two most recent years due to exceptionally low forecast errors of the two benchmarks, especially the first GDP estimate.
- JEL Code
- C8 : Mathematical and Quantitative Methods→Data Collection and Data Estimation Methodology, Computer Programs
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
C22 : Mathematical and Quantitative Methods→Single Equation Models, Single Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models &bull Diffusion Processes
- 25 June 2025
- MACROPRUDENTIAL BULLETIN - ARTICLE - No. 29Details
- Abstract
- Borrower-based measures (BBMs) are critical tools in the banking union’s macroprudential policy frameworks. They are designed to promote sustainable lending practices and strengthen the resilience of borrowers, lenders and the broader economy. Over the past decade, the adoption of BBMs has significantly increased across countries in the banking union, likely reflecting their effectiveness. This article reviews ten years of experience with the implementation of BBMs within banking union countries, with a view to facilitating peer learning and providing a comprehensive overview of BBM strategies and applications.
- JEL Code
- G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
R28 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Household Analysis→Government Policy
Interest rates
| Deposit facility | 2.00 % |
| Main refinancing operations (fixed rate) | 2.15 % |
| Marginal lending facility | 2.40 % |
Inflation rate
More on inflationExchange rates
| USD | US dollar | 1.1728 | |
| JPY | Japanese yen | 170.71 | |
| GBP | Pound sterling | 0.86110 | |
| CHF | Swiss franc | 0.9354 |
Financial stability
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