ECB Monetary Policy Strategy Review

ECB’s Governing Council's new monetary policy strategy

The Governing Council of the European Central Bank (ECB) has published its new monetary policy strategy on 8 July 2021.

• New strategy adopts symmetric 2% inflation target over medium term
• Governing Council confirms that HICP remains appropriate price measure and recommends inclusion of owner-occupied housing over time
• New monetary policy strategy is result of thorough review launched in January 2020
• Governing Council approves ambitious climate change action plan

Read more about the new monetary policy strategy in the ECB's press release and in the monetary policy strategy statement.

On 23 January 2020, the Governing Council of the European Central Bank (ECB) launched a review of its monetary policy strategy. The monetary policy strategy was adopted in 1998 and some of its elements were clarified in 2003.

Since 2003 the euro area and the world economy have been undergoing profound structural changes. Slowing productivity growth, an ageing population and the legacy of the financial crisis have driven interest rates down, reducing the scope for the ECB and other central banks to ease monetary policy by conventional instruments in the face of adverse cyclical developments. In addition, inflation and inflation expectations have fallen below the ECB’s price stability target. The threat to environmental sustainability, rapid digitalisation, globalisation and evolving financial structures have further transformed the environment in which monetary policy operates, including the dynamics of inflation.

The monetary policy strategy review will encompass the formulation of price stability, the monetary policy toolkit and its effectiveness, economic and monetary analyses and the ECB’s communication practices. Other considerations, such as financial stability, globalisation, employment and environmental sustainability, will also be part of the review.

The process is expected to be concluded by the middle of 2021.

The review will be based on thorough analysis and open minds, engaging with all stakeholders.