ECB Governing Council and Monetary Policy Decisions

The Governing Council comprises the members of the Executive Board and the Governors of the national central banks (NCBs) participating in the euro area. It is the primary decision-making body of the ECB.

Role of the Governing Council

The Governing Council formulates monetary policy in the euro area free from political interference and is required to represent the interests of the euro area as a whole. As members of the Governing Council, Governors of NCBs play a crucial role in decisions relating to monetary policy for the euro area. This supranational responsibility is underlined by voting rules of the Council whereby each member has one vote. The Statute provides that the Council acts with a simple majority of votes on major policy issues. In practice a vote may not be taken.

In the performance of their duties on the Governing Council, Governors use the expertise residing in their NCBs in the formulation of monetary policy. They take advice, but not instructions, with the result that the NCBs perform an important advisory role within the Eurosystem. In the Central Bank of Ireland, the Governor is advised and provided with a full brief on all the issues arising at Governing Council meetings and is accompanied by the Deputy Governor of Central Banking at the Governing Council meetings.

Monetary Policy Decisions

The Governing Council generally meets twice a month but assesses its monetary policy stance at the first meeting of the month. The key conventional monetary policy tool at their disposal is the level of official interest rates. The main interest rate that the Governing Council decides on is the fixed rate on the main refinancing operations, while a decision is also taken on the interest rates for the standing facilities, i.e., the marginal lending facility and the deposit facility. 

Since the intensification of the financial crisis in September 2008, the ECB has introduced a number of non-standard monetary policy measures with the aim to safeguard the primary objective of price stability and ensure an appropriate monetary policy transmission mechanism.

Immediately following a monetary policy setting Governing Council meeting, the ECB issues a press release providing details of the decision. The ECB subsequently holds a press conference during which the President outlines the reasons for the actions taken.

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