The European Central Bank (ECB) is the central bank for the Eurozone, responsible for monetary policy across 19 European Union countries that use the Euro currency. Established in 1998, the ECB’s primary mandate is maintaining price stability through interest rate policy, quantitative easing programs, and financial system oversight. ECB decisions significantly impact global financial markets.

ECB policy meetings and communications are closely monitored by traders worldwide, as Euro is the world’s second-most traded currency. The bank’s policy tools include main refinancing rates, asset purchase programs, and forward guidance. ECB actions affect not only European markets but also global risk sentiment, emerging market currencies, and commodity prices.

Real-world example: ECB announces 0.50% rate hike to combat inflation, causing EUR/USD to rally from 1.0200 to 1.0350 as traders anticipate continued policy tightening and higher European yields.