About Us

Maintenance of price stability

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 or employment 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.