Interest rates

The principal way to influence price stability is for the ECB to raise or lower interest rates – interest rates on short-term rates, that is, which central banks provide to commercial banks. To control interest rates, the ECB employs a two-pronged strategy.

  • Money-supply growth
    Money growth is one of the key indicators for inflation developments. The reference value for annual money growth is 4.5%. Deviations from this value may prompt the ECB to adjust interest rates. 
  • Economic indicators
    Several other macroeconomic and financial market variables provide information on the future development of inflation, e.g. wage growth, exchange rates and budgetary policies.