Transparency promotes a central bank’s effectiveness and public accountability. In this spirit, I hope to offer some perspective today on the role of a monetary strategy as pursued by central banks in general, and by the Eurosystem in particular.
The role of a monetary strategy Essentially, a monetary strategy reflects the way in which a central bank uses its primary instrument, often a short-term interest rate, to realise its objectives. Rather than offering a mechanical decision-making tool, the strategy describes a procedure. It is a guide rather than a cookery book.