European Central Bank

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European Central Bank

Context:

The ECB lowered its deposit rate from a record high of 4% to 3.75%, marking the first rate cut in five years.

 

More on News

  • The ECB is expected to make further rate cuts in 2024, influenced by inflation outlook, economic data, and monetary policy transmission strength.
  • The US Federal Reserve’s delay in policy easing could impact the ECB’s cautious approach, potentially weakening the euro and raising imported inflation.

 

About ECB Organisation

    • Established: June 1, 1998
    • Headquarters: Frankfurt, Germany
  • Objective
    • Price Stability: Maintain inflation rates below, but close to, 2% over the medium term.
  • Functions
    • Monetary Policy: The central bank sets key interest rates, which significantly impact the money supply and inflation in the Eurozone.  
    • Foreign Exchange Operations: It manages foreign reserves to stabilise the euro.
    • Issuance of Banknotes: The authority authorises the issuance of euro banknotes, ensures sufficient supply, and monitors circulation and authenticity.
  • Governance Structure
    • Governing Council: The main decision-making body comprises the six Executive Board members and the governors of national central banks in the Eurozone countries.
    • Executive Board: The executive branch, comprising the President, Vice-President, and four other members.
    • General Council: Advisory body including the President and Vice-President of the ECB and governors of all EU member states’ national central banks.
  • Recent Challenges and Initiatives
    • Economic Crisis Response: Addressed the 2008 financial crisis, Eurozone debt crisis, and COVID-19 economic impact.
        • Implemented measures like lowering interest rates, emergency liquidity assistance, and quantitative easing.
    • Climate Change: Integrating climate change considerations into monetary policy and financial stability assessments.
    • Digital Euro: Exploring a digital euro to complement cash and respond to the digitisation of payments.
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