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How are the Eurosystem's Monetary Policy Decisions Prepared? A Roadmap

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  • ALEXANDER JUNG
  • FRANCESCO PAOLO MONGELLI
  • PHILIPPE MOUTOT

Abstract

The monetary policy framework of the Eurosystem has received considerable attention in recent years: there is a well‐established and rich literature on the price stability objective, as well as the two‐pillar strategy of the ECB. This is less the case for the regular monetary policy preparations and the decision‐making process. This article provides an insider's roadmap to the procedures to prepare monetary policy decisions by the Governing Council of the ECB. The architecture of the Eurosystem permits the processing and analysis of a vast amount of national and aggregate economic, financial and monetary data and assists the Governing Council in taking monetary policy decisions – and this each month. Our aim is to describe the role of a variety of committees and sub‐committees that prepare and support the monetary policy decision‐making process. A federal organization is at the heart of this process. At the top of the pyramid of information there is a two‐tiered committee structure with the Executive Board taking the lead in bringing together most of the economic, financial and monetary analyses, and the Governing Council utilizing that information, for its monthly economic and monetary analyses.

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  • Alexander Jung & Francesco Paolo Mongelli & Philippe Moutot, 2010. "How are the Eurosystem's Monetary Policy Decisions Prepared? A Roadmap," Journal of Common Market Studies, Wiley Blackwell, vol. 48(2), pages 319-345, March.
    • Handle: RePEc:bla:jcmkts:v:48:y:2010:i:2:p:319-345
    DOI: 10.1111/j.1468-5965.2009.02054.x
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    2. Jung, Alexander, 2016. "Have monetary data releases helped markets to predict the interest rate decisions of the European Central Bank?," Working Paper Series 1926, European Central Bank.
    3. Alexander Jung, 2018. "Have money and credit data releases helped markets to predict the interest rate decisions of the European Central Bank?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(1), pages 39-67, February.
    4. Hamza Bennani & Matthias Neuenkirch, 2017. "The (home) bias of European central bankers: new evidence based on speeches," Applied Economics, Taylor & Francis Journals, vol. 49(11), pages 1114-1131, March.
    5. Jung, Alexander & Kiss, Gergely, 2012. "Preference heterogeneity in the CEE inflation-targeting countries," European Journal of Political Economy, Elsevier, vol. 28(4), pages 445-460.
    6. Beaupain, Renaud & Girard, Alexandre, 2020. "The value of understanding central bank communication," Economic Modelling, Elsevier, vol. 85(C), pages 154-165.
    7. Cour-Thimann, Philippine & Jung, Alexander, 2021. "Interest-rate setting and communication at the ECB in its first twenty years," European Journal of Political Economy, Elsevier, vol. 70(C).

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