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European Central Bank Monthly Bulletin

Sunday, 25 December 2011 16:28 European Central Bank

Based on its regular economic and monetary analyses, the Governing Council decided at its meeting on 12 January 2012 to keep the key ECB interest rates unchanged, following the 25 basis point decreases on 3 November and 8 December 2011. The information that has become available since early December broadly conﬁ rms the previous assessment of the Governing Council. Inﬂ ation is likely to stay above 2% for several months to come, before declining to below 2%. At the same time, the underlying pace of monetary expansion remains moderate. As expected, ongoing ﬁ nancial market tensions continue to dampen economic activity in the euro area, while, according to some recent survey indicators, there are tentative signs of a stabilisation in activity at low levels.

The economic outlook remains subject to high uncertainty and substantial downside risks. In such an environment, cost, wage and price pressures in the euro area should remain modest and inﬂ ation rates should develop in line with price stability over the policy-relevant horizon. Overall, it is essential for monetary policy to maintain price stability over the medium term, thereby ensuring a ﬁ rm anchoring of inﬂ ation expectations in the euro area in line with the Governing Council’s aim of maintaining inﬂ ation rates below, but close to, 2% over the medium term. Such anchoring is a prerequisite for monetary policy to make its contribution towards supporting economic growth and job creation in the euro area. A very thorough analysis of all incoming data and developments over the period ahead is warranted.

Download File: ECB: Monthly Bullettin - January