European Central Bank Press conference comparison — 7 March 2019 vs 25 July 2019
This European Central Bank press conference comparison covers 7 March 2019 and 25 July 2019. Overall, the newer document was more dovish. The July 2019 meeting marks a decisive dovish pivot from the March stance, as the ECB opens the door to rate cuts and QE in response to persistently weak inflation and downside risks. This strongly signals that a comprehensive easing package, likely including a rate cut and tiering, is forthcoming at the September meeting unless data improves.
What changed
More dovish. The July 2019 meeting marks a decisive dovish pivot from the March stance, as the ECB opens the door to rate cuts and QE in response to persistently weak inflation and downside risks. This strongly signals that a comprehensive easing package, likely including a rate cut and tiering, is forthcoming at the September meeting unless data improves.
- Inflation — More dovish. Inflation assessment remains persistently below target, with added emphasis on delayed convergence and eroding expectations.
- Labour Market — Little changed. Labour market description unchanged: cost pressures building but pass-through slow.
- Rate Path — More dovish. Forward guidance explicitly adds 'lower' rates and extends horizon to first half of 2020; concrete easing measures under preparation.
- Balance Sheet — More dovish. Shift from no QE discussion to explicit preparation of asset purchase options, signalling potential balance sheet expansion.
Key wording
we decided to keep the key ECB interest rates unchanged. We now expect them to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term.
Moreover, underlying inflation continues to be muted.
The risks surrounding the euro area growth outlook are still tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets.
labour cost pressures have strengthened and broadened amid high levels of capacity utilisation and tightening labour markets.
We moved the calendar-based part of our forward guidance from September to December.
they were unanimous.
We expect them to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to our aim over the medium term.
On the inflation side, we basically saw inflation which is below our aim and we see projected inflation that says that convergence is further out in time
The risks surrounding the euro area growth outlook remain tilted to the downside, reflecting the prolonged presence of uncertainties, related to geopolitical factors, the rising threat of protectionism, and vulnerabilities in emerging markets.
While labour cost pressures have strengthened and broadened amid high levels of capacity utilisation and tightening labour markets, the pass-through of cost pressures to inflation is taking longer than previously anticipated.
The Governing Council also underlined the need for a highly accommodative stance of monetary policy for a prolonged period of time, as inflation rates, both realised and projected, have been persistently below levels that are in line with its aim. Accordingly, if the medium-term inflation outlook continues to fall short of our aim, the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim.
Nuances were mostly, if not only, about what to do, whether we should have a package, what to do first among this list of instruments. Well, you know that some Council members have doubts about the two-tier system.
Official documents
Background reading
Related
7 March 2019 press conference · 25 July 2019 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
The Cadence Brief
The one number that moved central bank pricing — delivered each weekday morning.