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Monetary policy, which encompasses a number
of measures influencing the cost and availability of credit,
has evolved as a major tool of economic policy in many countries.
A tight monetary stance, characterised generally by high real
interest rates, is adopted to rein in monetary expansion and
thereby control inflation. On the other hand, a loose monetary
policy stance is characterised by low real interest rates and
greater availability of credit, thus favouring an expansion
in investment and expenditure. It has been increasingly acknowledged
that although monetary policy can stimulate output and employment
in the short term, it has little effect on output growth in
the longer term. The international trend, therefore, has been
for central banks to concentrate on ensuring price stability.
In accordance with the Treaty on the Functioning of the European Union and the Statute of the European System
of Central Banks (ESCB) and of the European Central Bank (ECB),
the primary objective of the Central Bank of Malta is to maintain
price stability. This has been defined by the Governing Council
of the ECB as keeping inflation in the euro area below but
close to 2% over the medium term. The Central Bank of Malta
contributes to Eurosystem monetary policy decisions through
the participation of the Governor in the Governing
Council of the ECB.
In performing its tasks, the Central Bank of Malta operates
autonomously and independently, in compliance with the applicable
provisions of Community and Maltese law. The Bank also seeks
to be transparent and publicly accountable.
More information on the implementation of monetary policy and
the instruments that the Bank uses to carry out monetary policy
can be found in the sections on monetary
policy in this website.
Malti
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