What is European Central Bank (ECB)?
The ECB is headquartered in Frankfurt and has been operational since 1999. It sets monetary policy for the Eurozone โ the 20 EU countries that use the euro. Its primary objective is price stability, defined as inflation close to but below 2% over the medium term. Key policy rates: the deposit facility rate (most-watched), main refinancing rate, and marginal lending rate. The Governing Council meets every six weeks.
Why it matters for investors
The euro is the world's second-most traded currency. ECB decisions move EUR/USD, Eurozone bond yields (especially German Bunds โ the European safe asset), and impact 20 economies with very different growth profiles. The ECB faces the "one size fits none" problem of setting policy for both Germany and Greece simultaneously.