Boardroom of the Governing council of the ECB ©Robert Metsch / ECB

Monetary policy decisions

The objective of the monetary policy decisions taken by the Governing Council of the ECB is to ensure price stability – the main aim of the Eurosystem’s monetary policy. The ECB Governing Council, on which the president of the Bundesbank has a seat and a voice as an independent representative of Germany, traditionally takes these decisions at its first meeting of the month. Decisions relate not only to the key interest rates at which the Eurosystem lends its counterparties, generally banks, central bank money in return for collateral.

Other important monetary policy instruments are the bidding procedures used to provide funds, the maturities of these refinancing operations, the volume of liquidity provided and the amount of central bank money that the Eurosystem’s counterparties must hold as minimum reserves. The president of the Deutsche Bundesbank uses the economic analyses and forecasts when preparing monetary policy decisions. Particular weight is attached to the analysis of money and credit developments (monetary analysis). Unlike the analysis of economic developments and prices, which focuses more on the short term, these variables also provide important indications as to whether the objective of price stability will be met in the medium term. Moreover, they provide some indication of whether imbalances are building up on the financial markets and therefore forge a link with the analysis of financial stability.