European Central Bank Strategy Review
The European Central Bank Strategy Review Outcome
The European Central Bank (ECB) has published its new monetary policy strategy, following a thorough review that began on 23 January 2020. The aim of the review was to make sure the ECB’s monetary policy strategy was fit for purpose, both today and in the future. It covered all aspects of the ECB's monetary policy within the framework of its mandate, which is to maintain price stability.
Over the last 18 months, the ECB held numerous seminars, presentations, discussions and meetings focused on all elements of the review. The current review has been a collective effort by staff at the ECB and the national central banks of the euro area (including Central Bank of Ireland) organised in 13 separate work streams.
In the framework of the review, the ECB and the national central banks hosted listening events with the general public, civil society and academia. Ideas and perspectives shared at these events have fed into the Governing Council's deliberations.
The outcomes from the ECB's new monetary policy strategy statement include:
- New strategy adopts symmetric 2% inflation target over medium term;
- Governing Council confirms that Harmonised Index of Consumer Prices (HICP) remains appropriate price measure and recommends inclusion of owner-occupied housing over time;
- Governing Council approves ambitious climate change action plan;
- Monetary policy communication will be more layered to reach a wider audience and outreach events with the public will become a structural feature;
- Governing Council intends to carry out periodic strategy assessments, with the next expected in 2025.
You can read the ECB's new monetary policy statement get more information about the ECB's action plan to include climate change considerations in its monetary policy strategy or find out about the 13 separate work streams and the key topics they looked at for the strategy review.
About the ECB's Strategy Review
As part of the review, the ECB looked at:
- What is meant by "price stability" i.e. what rate of inflation we should aim for
- How the ECB analyses the economy, to ensure risks to price stability are seen in good time and the affect that decisions have on stakeholders – like consumers, companies, markets and banks –are well understood.
- How issues such as employment, social inclusion, climate change and financial stability are relevant as the ECB pursues its primary mandate
- The monetary policy instruments that the ECB uses, including interest rates and asset purchases
- The way the ECB and the national central banks connect to people and communicate, because the euro is a public good and all citizens should be able to understand the ECB’s mission and decisions.
The ECB's monetary policy assessment every six weeks remains separate from the strategy review – they are two different exercises. The purpose of the review is to make the ECB's monetary policy strategy fit for years to come. In the meantime, the ECB Governing Council, of which Central Bank of Ireland Governor Gabriel Makhlouf is a member, continue to monitor the evolution of the economy and inflation and take its decisions as appropriate.
Since March 2020 monetary policy measures have been introduced to limit the impact of the COVID-19 pandemic on the economy and support all European citizens. Such measures aim to help the economy absorb the shock of the current crisis. This is distinct from the work underlying the strategy review.
The Central Bank of Ireland, as a member of the Eurosystem, directly contributed to the work of the ECB's Strategy Review. Staff within the Central Bank of Ireland sat on a number of
the workstreams underlying the review, which covered a range of topics. The Governor of the Central Bank of Ireland, Gabriel Makhlouf, sits on the
ECB Governing Council. The Governing Council will ultimately make any decisions on monetary policy strategy within the context of the review.
As part of the wider Eurosystem outreach, Central Bank of Ireland worked to ensure that the perspectives of people in Ireland were included in the development of the ECB's new strategy.
In the second half of 2020, we widely promoted the ECB’s online consultation process. This enabled members of the public to have their say in relation to the review.
The Central Bank also held a number of listening events hosted by Governor Makhlouf to provide interested stakeholders with opportunities to contribute their perspectives on topics related to the ECB's Strategy Review.
In December 2020, we held a virtual listening event with representatives from the academic community that focused on economic and monetary policy perspectives.
Virtual Listening Event (December 2020) – Full Report | pdf 303 KB
Virtual Listening Event (December 2020) – Summary Report | pdf 860 KB
In February 2021, we held two virtual listening events to engage with representatives from the business community and with representatives from civil society.
Virtual Listening Event (February 2021) – Report | pdf 738 KB
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