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Monetary Policy

Author

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  • Anton Jevčák

Abstract

This section focuses on the ECB's conduct of monetary policy during its first 20 years of existence. Whereas until October 2008 the ECB conducted monetary policy mainly by adjusting its key policy rates, during the global financial crisis and in its aftermath the Bank introduced a number of non-standard measures. Notably, it started to provide forward guidance on how it expected its key interest rates to evolve, and it conducted large-scale asset purchases to support monetary policy transmission in certain market segments and provide additional monetary stimulus once key interest rates approached their lower bound. As a result, the ECB succeeded in ensuring that annual HICP inflation in the euro area averaged 1.7% between January 1999 and December 2018. Nevertheless, whereas annual inflation averaged 2.2% over the first decade, it amounted to on average just 1.3% over the second decade, as average annual GDP growth in the euro area slowed down from about 4% during 1999-2008 to just 2.5% over 2009-2018.

Suggested Citation

  • Anton Jevčák, 2019. "Monetary Policy," Quarterly Report on the Euro Area (QREA), Directorate General Economic and Financial Affairs (DG ECFIN), European Commission, vol. 18(2), pages 73-83, November.
    • Handle: RePEc:euf:qreuro:0182-05
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