Governor Olli Rehn
Bank of Finland
Appendix to the English version of the press release
Considering a review of the ECB's monetary policy framework
Helsinki, 18 December 2018

Considering a review of the ECB's monetary policy framework

Price stability remains the primary objective of the ECB’s monetary policy. This mandate is one that is given, but the ECB’s strategy to fulfil its objectives is not cast in stone and must instead evolve with the economic environment. The ECB’s monetary policy framework comprises those very assumptions, principles and instruments that the ECB uses in its pursuit of price stability.

The ECB’s monetary policy framework was adjusted in 2003, or about 15 years ago, based on the available economic literature at the time and also on its then 5-year experience of conducting a single monetary policy.

By beginning to review its monetary policy strategy would place the ECB in good company. For exam-ple, the central banks of the United States, Canada, the United Kingdom and Sweden regularly review their strategies.

Considering a review of the ECB's monetary policy framework would prove useful even when the ECB Governing Council is satisfied with the current strategy.

Both the operating environment for and the instruments of monetary policy have changed considera-bly since the previous review undertaken in 2003: Firstly, the real equilibrium interest rate that is of key relevance to monetary policy has declined and the probability of monetary policy facing an effec-tive lower bound has increased. Secondly, the euro area has been hit by a financial crisis, sovereign debt crisis, liquidity trap and disruptions in monetary policy transmission.

To ensure the success of monetary policy it would be useful to look at the constituents of the strategy with fresh eyes.

Press release 18 December 2018
Now is the time to strengthen public finances and the foundations for productivity growth