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Safe Bank

Published: 2022-02-04

The new monetary policy strategy of the European Central Bank – continuity and change

Konrad Szeląg Logo ORCID
Section: Problems and Opinions
https://doi.org/10.26354/bb.3.4.85.2021

Abstract

The ECB's original monetary policy strategy was adopted in 1998 and updated in 2003. Since then, there have been several important developments and shocks experienced by the European economy (financial and economic crises, periods of very low inflation and unconventional monetary policy, COVID-19 pandemic, etc.). Moreover, in the meantime, climate change has become an issue of growing importance in the EU. All those issues have prompted a review and update of the ECB’s strategy. The new strategy was published in July 2021. This article focuses on several new elements of the ECB’s strategy. The first one is the issue of the costs of living in private homes (owner-occupied housing – OOH) and their planned integration into the coverage of the ECB’s inflation index (HICP). This is aimed at improving cross-country comparability as well as the representativeness of the HICP, as OOH costs represent an important share of household consumption. The second element is climate change and its economic consequences, which are to be taken into account when making monetary policy decisions by the Governing Council. Different views, pros and cons, advantages and disadvantages have been presented with regard to the above issues. The last part of the article provides some concluding remarks and recommendations.

JEL Codes

E58, Q54, E52

Citation rules

Szeląg, K. (2022). The new monetary policy strategy of the European Central Bank – continuity and change. Safe Bank, 85(4), 56–78. https://doi.org/10.26354/bb.3.4.85.2021

Cited by / Share

Vol. 85 No. 4 (2021)
Published: 2022-02-04


ISSN: 1429-2939
eISSN: 2544-7068
Ikona DOI 10.26354

Publisher
Bankowy Fundusz Gwarancyjny

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