Low inflation and interest rates challenge central banks to review their monetary policy strategies

Abstract

Monetary policy strategy specifies the key principles that a central bank adheres to in pursuit of its objective. The primary objective of the ECB is to maintain price stability. Central banks’ operating environment has changed on the back of the protracted financial and debt crisis, population ageing and the low level of interest rates. New monetary policy instruments have been introduced. Research on monetary policy tools and the effectiveness of the measures implemented has increased. Changes in the operating environment and increased economic knowledge challenge central banks to review their monetary policy strategies.