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Review of the European Central Bank’s monetary policy strategy

Revisão da estratégia de política monetária do BCE

The European Central Bank (ECB) is reviewing its monetary policy strategy. The aim is to find the best way to fulfil its main task: to keep prices stable in the euro area. This means ensuring that inflation – the rate at which the prices of goods and services change over time –  remains positive, low and stable. Currently, the ECB intends to keep inflation in the euro area below, but close to, 2% over the medium term.

The ECB wants to know what euro area citizens think about its monetary policy. That is why the Banco de Portugal – as part of the system of euro area central banks – has hosted various events to hear the opinions of Portuguese citizens. Between December 2020 and January 2021 three events were organised with university students and professors, representatives of civil society organisations and journalists. The Governor of the Banco de Portugal, who plays a role in monetary policy decision-making as a member of the ECB’s Governing Council, was present at all these events.

Why it is worth participating

Price stability concerns everyone. It is important for the decisions you make on a daily basis, be they to consume, invest, save or borrow.

That is why we want to hear your ideas and concerns before deciding on the ECB’s new monetary policy strategy. We want to hear what you have to say on how inflation affects you and the economic obstacles you face in your daily life as well as your thoughts on how the ECB and the Banco de Portugal communicate with you.

By participating in these events, you can put your views directly to those who make the monetary policy decisions that affect you.

The Banco de Portugal will publish a summary of the outcome of these events on its website and will convey to the ECB the views, suggestions and concerns of Portuguese citizens. Input from these events will help the ECB make better decisions regarding its future strategy.

Why the ECB is reviewing its strategy

Since the last strategy review in 2003, the euro area economy has undergone fundamental changes.

Globalisation, digitalisation, an ageing population and climate change have effects on the way the economy works, and so also on monetary policy. Furthermore, the effects of the economic crises of recent years (2008-09 and 2011-13) coupled with the current pandemic crisis have led the ECB to use new instruments in addition to interest rates.

The ECB wants to make its monetary policy strategy as effective as possible in this challenging and changing environment. It wants to ensure that it can keep prices stable in the euro area and contribute to the achievement of the European Union’s objectives, whether in times of crisis or normal times.

How the review will be carried out

Several work streams with experts from the ECB and the 19 central banks of the euro area countries are looking at key topics for the strategy review.

The ECB and the national central banks are also hosting events to hear opinions from a wide range of stakeholders, including academics, financial sector representatives, Members of the European Parliament and civil society organisations. Euro area citizens have also had the opportunity to share their views through the ECB Listens Portal.

The ideas and concerns shared at the listening events and on the portal and the work carried out by experts will feed into the Governing Council’s decisions on the new strategy.

The ECB will continue to provide regular updates to the public on the strategy review process at its press conferences, on its website and on its social media channels. Summaries of the input received on the portal and at events across the euro area will be published on digital channels. The final result of the review should be made public in the second half of 2021.

What is the review about

The review covers all aspects of the ECB's monetary policy, within its mandate to maintain price stability, as laid down in the European treaties. The review is not about what the ECB does, but how it does it.

The ECB, together with the national central banks, is looking at:

  • what is meant by ‘price stability’, that is, what rate of inflation it should aim for;
  • the way it analyses the economy to assess risks to price stability;
  • how other issues such as employment, financial stability and climate change are also relevant;
  • the monetary policy instruments it uses;
  • the way it connects to and communicates with you.

The review will be based on thorough analysis and take an open-minded approach.


See below the videos of public sessions (in Portuguese only):


More about the review of the European Central Bank’s monetary policy strategy

Banco de Portugal Publications

- Tiago Cavalcanti, Zeina Hasna e Cezar Santos (2020) “Climate change mitigation policies: aggregate and distributional effects”, Banco de Portugal Working Paper No 17, November
- Christian Bittner, Diana Bonfim, Florian Heider, Farzad Saidi, Glenn Schepens e Carla Soares (2020) “Why so negative? The effect of monetary policy on bank credit supply across the euro area”, mimeo
- Bernardino Adão, Borghan Narajabad e Ted Temzelides (2020) “Renewable technology adoption and the macroeconomy”, mimeo
- João Valle e Azevedo, João Ritto e Pedro Teles (2019) “The neutrality of nominal rates: how long is the long run?”, Banco de Portugal Working Paper No 11, June
- Bernardino Adão (2019) “Why is price stability a key goal of central banks?“, Economics Synopsis, Banco de Portugal Economic Studies, January
- Nuno Alves, Diana Bonfim, Carla Soares (2016) “Surviving the perfect storm: the role of lender of last resort”, Banco de Portugal Working Paper No 17, September
- Pedro Teles, Harald Uhlig e João Valle e Azevedo (2016) “Is quantity theory still alive?”, The Economic Journal, 126 (591), 442–464

Interviews and speeches

[28.04.21] Introductory Statement by Governor Mário Centeno at The Institute of International and European Affairs Webinar: "Monetary Policy in Transition"
[03.03.21] Interview with Governor Mário Centeno to Central Banking about monetary-fiscal interaction in the eurozone