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

Abstract

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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