|
Euro bank announces policy
|
 |
October 14, 1998: 10:22 a.m. ET
Duisenburg sets out flexible strategy for managing Europe's single currency
|
LONDON (CNNfn) - Stressing its desire to maintain price stability, the European Central Bank on Tuesday revealed its long-awaited strategy for setting monetary policy for the 11 countries participating in economic and monetary union.
In a statement released in Frankfurt following the monthly meeting of the bank's governing council, ECB president Wim Duisenberg outlined the mix of targeting inflation, setting pre-announced broad money reference values, and analyzing leading indicators that members hope will limit volatility in the transition to monetary union.
"Of most concern are some of the uncertainties that will inevitably arise as the result of the move to stage three," Duisenberg said. "Against this background, the council has chosen a distinct monetary policy strategy and one that reflects the circumstances it faces at present."
Duisenberg said the ECB would continue the hard money policies of the national central banks, which will comprise the European System of Central Banks when stage three of EMU is launched in January. Those policies, combined with market expectations, helped bring about the necessary convergence of European interest rates over the last 18 months in the run-up to monetary union.
According to the statement, the governing council is defining price stability as annual growth of no more than two percent in the harmonized index of consumer prices (HICP), which measures inflation across the Euro-11. By announcing its intentions, the council said it was adding an element of transparency to its efforts.
To limit jumps in the HICP, the bank will set targets for the pan-European money supply and measure them against actual growth figures. It will also look at "a wide range of other variables" in an effort to protect price stability.
Duisenberg called the policy pro-active and pan-European. He said the decision to consider an array of information shows that the ECB will not mechanically react to moves in specific indicators.
He added that the bank is committed to transparency, vowing that any changes in tack will be accompanied by detailed explanations from the bank as to why the moves are being made. 
|
|
|
|
|
|
European Central Bank
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
