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Monetary policy strategy
Background

Monetary policy strategy

The primary objective of the Eurosystem, which consists of the ECB and the national central banks of EU Member States that have adopted the euro, is to maintain price stability. Monetary policy’s greatest contribution to general wellbeing, in particular to high economic growth and employment, is the maintenance of price stability over the medium term.

The Eurosystem’s target is to maintain inflation in the euro area at 2% over the medium term. The decisions in meeting this objective are taken by the Governing Council of the ECB on the basis of its monetary policy strategy, and are implemented within its operational framework. The primary monetary policy instrument is the set of ECB policy rates. Having regard for the effective lower bound of key interest rates, other instruments are in use depending on the situation, most notably monetary policy forward guidance, asset purchases, and long-term refinancing operations.

The approach to organising, evaluating and cross-checking the information relevant to assessing the risks to price stability is based on a two-pillar strategy, consisting of economic analysis, and monetary and financial analysis. Within this framework, the economic analysis focuses on real and nominal economic developments, whereas the monetary and financial analysis examines monetary and financial indicators, with a focus on the operation of the monetary transmission mechanism and the possible risks to medium-term price stability from financial imbalances and monetary factors. The pervasive role of macrofinancial linkages in economic, monetary and financial developments requires that the interdependencies across the two analyses are fully incorporated.

The aspect of climate change and its implications in setting an appropriate inflation target are also taken into account in the design of monetary policy.

For more on the monetary policy strategy, see the ECB website.

Inflation rate in the Euro area and in Slovenia (HICP)
year-on-year growth, %

Filters
Date Slovenia Euro area
01/31/2024 3.4 2.8
02/29/2024 3.4 2.6
03/31/2024 3.4 2.4
04/30/2024 3 2.4
05/31/2024 2.5 2.6
06/30/2024 1.6 2.5
07/31/2024 1.4 2.6
08/31/2024 1.1 2.2
09/30/2024 0.7 1.7
10/31/2024 0 2
11/30/2024 1.6 2.2
12/31/2024 2 2.4