Speech by Piero Cipollone, Member of the Executive Board of the ECB, at an MNI Connect webcast

Frankfurt am Main, 18 February 2025

Today I would like to discuss the ECB’s balance sheet and its implications for our monetary policy.

In recent years, the monetary policy debate has mainly focused on our interest rate decisions. This is for good reason. In response to the biggest inflation shock in a generation, we embarked on the fastest tightening of monetary policy in the ECB’s history through rate hikes.

During this tightening phase, we used policy rates as the primary tool for setting our monetary policy stance, while normalising our balance sheet in a measured and predictable way. We initiated the gradual unwinding of our asset purchase programmes and recalibrated our targeted longer-term refinancing operations (TLTROs).^[1] As a result, the size of our balance sheet has fallen by more than a quarter from its peak.

Policy rates remain our primary instrument and will therefore…