WHAT is 'ECB Announcement '

ECB Announcement refers to the announcement of any changes to monetary made by the Governing Council of the European Central Bank, following monetary policy meetings.

The Governing Council of the European Central Bank is the primary decision-making body of the European Central Bank, the central bank of the eurozone. It meets every two weeks at the Eurotower in Frankfurt, Germany, with one out of every three of these meetings designated as a monetary policy meeting, when the council may make changes to monetary policy. The ECB Announcement follows these meetings, along with a press conference during which the European Central Bank President explains the decision and takes questions from the press.

BREAKING DOWN 'ECB Announcement '

ECB announcements are closely watched by investors for any changes to the ECB’s target rate for deposit facilities offered to participating banks. These interest rates filter through to the rest of the economy, affecting interest paid on government, corporate and personal debt. This, in turn, affects the prices of other assets, like stocks. Speculators in all asset classes closely watch ECB announcements as market-moving events.

Since the financial crisis, people have also watched announcements by the Governing Council of the ECB for changes to the bank’s asset purchase program, which was formed to help provide further liquidity for the European economy and reach its inflation goals. In 2012, the ECB controversially expanded this program to include sovereign bonds, in a process also known as quantitative easing.

Goals of the ECB Announcement

The mandate of the European Central Bank is to maintain price stability, which it has defined as 2% inflation as measured by the Harmonized Index of Consumer Prices (HICP). Unlike the United States’ Federal Reserve, the ECB does not have a mandate to promote maximum employment. ECB announcements of monetary policy are part of the bank’s communication strategy, which seeks to harmonize the public’s perceptions of ECB monetary policy with its actions in financial markets.

Since the financial crisis, the ECB has struggled to raise inflation to its 2% target, and so ECB announcements and press conferences have been geared to reassure the public of the central bank’s commitments to raise inflation, even if that means continuing to buy sovereign bonds in large quantities indefinitely. In 2014, the ECB even announced its intention to lower interest rates on one of its key lending facilities below zero for the first time in history. ECB press conferences are chaired by the President of the European Central Bank, with Mario Draghi serving in that role from 2011 through 2019.

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