European Central Bank Strategy Review Governor Gabriel Makhlouf

The ECB, together with the 19 national central banks of the euro area (including Central Bank of Ireland), is reviewing its monetary policy strategy.

The review will ensure that the ECB’s strategy is fit for purpose and helps the ECB to fulfil its primary mandate of keeping prices stable.

As part of the review, the ECB is looking 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 current ECB Strategy Review was launched in early 2020. The conclusion of the review was postponed from the end of 2020 to the second half of 2021 due to the COVID-19 pandemic.

Why is the ECB reviewing its strategy now?

The ECB’s monetary policy strategy was last reviewed in 2003. Since then, there have been fundamental changes in the economy. Declining growth and the legacy of the financial crisis have driven interest rates down, making it harder for the ECB and other global central banks to ease monetary policy when economic growth is slow. As a result, the ECB’s set of instruments has expanded. Developments like globalisation, digitalisation, an ongoing ageing population and climate change also pose new challenges to the economy. The ECB wants its monetary policy strategy to be as effective as possible in this challenging and changing environment – both today and in the future.

How will the strategy review affect current monetary policy?

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, will 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.

Where does Central Bank of Ireland fit into the review?

The Central Bank of Ireland, as a member of the Eurosystem, is directly contributing to the work of the ECB’s Strategy Review. Staff within the Central Bank of Ireland sit on a number of the workstreams underlying the review, which cover 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.

Ensuring people in Ireland can take part in the Review

As part of the wider Eurosystem outreach, Central Bank of Ireland has also been working to ensure that the perspectives of people in Ireland are 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.

Listening Events

The Central Bank has 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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