- 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.
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.