In short: The ECB is the central bank of the euro area; together with the national central banks it manages the euro and sets interest rates to keep inflation at 2% over the medium term.
Simply put: Since 2021 the target has been symmetric: inflation below 2% is as unwelcome as inflation above it. The earlier wording ("below, but close to, 2%") was read as a ceiling. Through the Single Supervisory Mechanism (since November 2014) the ECB supervises banks in the euro area. It also publishes the euro reference exchange rates and is preparing the digital euro. Since 2026 the Bulgarian National Bank takes part in its decisions.
Example: If inflation is a fictional 4%, the ECB may raise interest rates. Loans become dearer, spending slows and prices rise more slowly — but the effect arrives months later.
Watch out: Interest rates are set for the whole euro area, not for one country.
Source: ECB, monetary policy strategy — https://www.ecb.europa.eu/mopo/strategy/html/index.en.html · ECB Banking Supervision — https://www.bankingsupervision.europa.eu