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Monetary policy

Monetary policy

Price stability guards means of savers, income earners, is significant for maintaining growth, employment. It is the primary objective of euro area monetary policy.

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Goal

The monetary policy of Latvijas Banka and the Eurosystem aims to achieve price stability so that inflation stands at 2% over the medium term, and this aim is symmetric.

Decisions

In the euro area, monetary policy decisions are taken by the Governing Council of the European Central Bank comprising all Governors of the central banks. The decisions are binding on all Member States.

Implementation

Monetary policy is implemented by the Eurosystem, also including Latvijas Banka, by applying the monetary policy instruments which are regularly adjusted to the current situation in the economy and financial market.

Forecasts

GDP and inflation projections in Latvia and the euro area constitute an integral part of monetary policy.

Economic analysis

Monetary policy decisions are taken based on a detailed economic analysis in the euro area, including Latvia, and the world at large. The analysis of economic indicators also enables Latvijas Banka to play a role of a government adviser.