European Central Bank Press conference comparison — 12 December 2019 vs 12 March 2020
This European Central Bank press conference comparison covers 12 December 2019 and 12 March 2020. Overall, the newer document was more dovish. The ECB shifted from cautious accommodation to aggressive easing in response to the COVID-19 shock, with an unprecedented QE top-up and readiness to cut rates further. The next decision is likely to maintain or expand accommodation if conditions deteriorate.
What changed
More dovish. The ECB shifted from cautious accommodation to aggressive easing in response to the COVID-19 shock, with an unprecedented QE top-up and readiness to cut rates further. The next decision is likely to maintain or expand accommodation if conditions deteriorate.
- Inflation — More hawkish. Prior passages stressed muted inflation and dissatisfaction, while current merely states a 1.6% forecast without expressing discontent, a less dovish tone.
- Labour Market — Little changed. Both documents highlight resilient labour cost pressures but delayed pass-through to inflation; no material shift.
- Rate Path — More dovish. Guidance on rates maintained with explicit downside bias and open commitment to cut if needed, reinforced by unanimous package.
- Balance Sheet — More dovish. Introduction of €120 billion QE envelope, flexible issuer limits, and commitment to combat fragmentation mark a massive expansion.
Key wording
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.
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.
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.
While labour cost pressures have strengthened amid tighter labour markets, the weaker growth momentum is delaying their pass-through to inflation.
In view of the weakened economic outlook
Is it satisfactory? It is certainly directionally good. But is it the aim that we pursue? No, indeed.
we decided to add a temporary envelope of additional net asset purchases of €120 billion until the end of the year, ensuring a strong contribution from the private sector purchase programmes.
we still see inflation in 2022 at or about 1.6%, as will be published later on.
the spread of the coronavirus (COVID-19) has been a major shock to the growth prospects of the global and euro area economies and has heightened market volatility.
While labour cost pressures have so far remained resilient amid tighter labour markets, the weaker growth momentum is delaying their pass-through to inflation.
The risks surrounding the euro area growth outlook are clearly on the downside.
The risks surrounding the euro area growth outlook are clearly on the downside. In addition to the previously identified risks related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets, the spread of the coronavirus adds a new and substantial source of downside risk to the growth outlook.
Official documents
Background reading
Related
12 December 2019 press conference · 12 March 2020 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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