European Central Bank Press conference comparison — 12 September 2019 vs 12 December 2019

This European Central Bank press conference comparison covers 12 September 2019 and 12 December 2019. Overall, the newer document was more dovish. The ECB held steady after September's aggressive easing, acknowledging slightly less pronounced downside risks and muted inflation without reinforcing urgency. This suggests a prolonged hold unless the outlook deteriorates further.

What changed

More dovish. The ECB held steady after September's aggressive easing, acknowledging slightly less pronounced downside risks and muted inflation without reinforcing urgency. This suggests a prolonged hold unless the outlook deteriorates further.

Inflation — More dovish. Inflation remains muted and below target; dissatisfaction reiterated, but some tentative stabilisation slightly reduces urgency versus September's downward revision.
Labour Market — More dovish. Labour cost pressures are not translating into inflation due to weak growth, and remaining slack is suggested, supporting continued accommodation.
Rate Path — Little changed. Rates held with unchanged forward guidance; the strong easing bias from September (rate cut, open-ended lower bound) is replaced by a wait-and-see posture, with some hawkish hints on reversal rate and strategic review.
Balance Sheet — Little changed. No new balance sheet actions; APP and tiering are described as functioning as intended, with strategic review to assess tool effectiveness.

Key wording

12 September 2019

we decided to lower the interest rate on the deposit facility by 10 basis points to -0.50%.
rate path: Rate cut increases accommodation, lowering short-term yields.

We now expect the key ECB interest rates to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
rate path: Open-ended lower-bound guidance, rates on hold for extended period.

the Governing Council decided to restart net purchases under its asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November.
rate path: QE restart adds further stimulus, compresses term premia.

The risks surrounding the euro area growth outlook remain tilted to the downside.
rate path: Downside risks flag vulnerability, support further easing bias.

Measures of underlying inflation remained generally muted and indicators of inflation expectations stand at low levels.
inflation: Persistent low inflation undershoot justifies aggressive easing.

The second element is the persistent and the persistence of downside risks of trade nature but also geo-political nature in the eurozone.
rate path: Explicit mention of persistent downside risks justifies accommodative stance.

12 December 2019

Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. We expect them to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
rate path: Rates unchanged but explicit guidance that they could be cut further (lower levels) until inflation converges, signalling prolonged accommodation.

they form a package. There were several components to that package and I think that the intention was for some of the measures, such as the interest rate, to actually have an impact on the short-term end of the yield curve, the forward guidance that was also part of the package that gives a clear calendar and induces an automatic adjustment, depending on the state of the economy.
rate path: Describes existing forward guidance as automatic adjuster; no new conditionality.

The asset purchase programme that was re-initiated is intended to have an impact on the long end of the yield curve.
rate path: Confirms QE is targeting long end, anchoring yields.

The risks surrounding the euro area growth outlook, related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets, remain tilted to the downside, but have become somewhat less pronounced.
rate path: Downside risks persist but the 'somewhat less pronounced' wording suggests a slight improvement, reducing immediate urgency for more easing.

The incoming data since the last Governing Council meeting in late October point to continued muted inflation pressures and weak euro area growth dynamics, although there are some initial signs of stabilisation in the growth slowdown and of a mild increase in underlying inflation in line with previous expectations.
inflation: Inflation remains muted, confirming the need for continued stimulus; the stabilisation signals are tentative and do not alter the dovish stance.

In view of the weakened economic outlook
rate path: Acknowledges economic weakness, implying need for accommodative policy

Official documents

Background reading

12 September 2019 press conference · 12 December 2019 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology