On the 19 February 2015 the ECB published, for first time an account of a monetary policy meeting held by its governing council. In so doing the ECB has aligned itself with the communication policy of other leading central banks. The US Federal Reserve, the Bank of England and the Bank of Japan all publish minutes or accounts of the meetings at which decisions on monetary policy are taken.
From now on the ECB will publish an account of each monetary policy meeting held by the governing council. This account is to be published one month after the meeting (the intention previously was to publish a record with a 30-year lag).
The minutes published by the ECB are 17 pages long and provide a comprehensive review of the factors that led the ECB to announce its programme of quantitative easing. The accounts refer, in particular to the risks that the fall in oil prices would lead to an unanchoring of medium to longer-term market-based inflation expectations. In the ECB’s view risk of a “too prolonged a period of too low inflation” raised the possibility of “deflationary forces setting in.” This, states the minutes “would not permit an attitude of benign neglect.” Hence the launch of an expanded asset purchase programme (EAPP) whose objective it is to bring about a sustained adjustment in the path of inflation consistent with the aim of achieving inflation rates below, but close to, 2%.
The minutes published by the ECB do not detail the way each member of the governing council voted but they do refer to a “large majority” voting in favour of the EAPP.
In publishing this account the ECB gives us a better understanding of the thinking behind its monetary policy decisions. In the past the workings of central banks were often somewhat opaque. In recent years however monetary policy makers around the world have provided more transparency on their decision making as their greater independence to set interest rates has led to a need for both public accountability and communication on the factors that influence monetary policy.
Policy makers may also be able to influence the behaviour of consumers who have an understanding of the objectives the central bank is pursuing and whose consumption reflects their expectations about, for example, the future path of retail prices.
Currently, with inflation way below target, the ECB may well want to ensure there is no ambiguity about their objective of raising the rate of inflation closer to the 2% target.