European Central Bank Press conference comparison — 12 December 2019 vs 30 April 2020
This European Central Bank press conference comparison covers 12 December 2019 and 30 April 2020. Overall, the newer document was more dovish. The ECB shifted from a cautiously accommodative posture to an aggressively expansionary stance, deploying new instruments and signaling unlimited flexibility to combat the severe pandemic-driven downturn. This signals that further easing measures, including potential rate cuts and expanded asset purchases, are likely if conditions deteriorate further.
What changed
More dovish. The ECB shifted from a cautiously accommodative posture to an aggressively expansionary stance, deploying new instruments and signaling unlimited flexibility to combat the severe pandemic-driven downturn. This signals that further easing measures, including potential rate cuts and expanded asset purchases, are likely if conditions deteriorate further.
- Inflation — More dovish. Inflation outlook worsened significantly with declining actual and expected inflation, reinforcing the need for further accommodation.
- Labour Market — More dovish. Labour market conditions deteriorated sharply from weak recovery to severe contraction, strengthening the case for stimulus.
- Rate Path — More dovish. Rate path shifted from conditional hold with potential for cuts to active easing with new instruments and a commitment to maintain accommodation until inflation converges robustly.
- Balance Sheet — More dovish. Balance sheet stance turned more accommodative with expressed readiness to revise self-imposed limits and deploy unlimited flexibility in PEPP to combat fragmentation.
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.
Accordingly, the Governing Council decided today to further ease the conditions on our targeted longer-term refinancing operations (TLTRO III).
Inflation has declined as a result of the sharp fall in oil prices and slightly lower HICP inflation excluding energy and food.
the severe risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the coronavirus pandemic.
Survey indicators for consumer and business sentiment have plunged, suggesting a sharp contraction in economic growth and a profound deterioration in labour market conditions.
Given the highly uncertain duration of the pandemic, the likely extent and duration of the imminent recession and the subsequent recovery are difficult to predict.
Market-based indicators of longer-term inflation expectations have remained at depressed levels.
Official documents
Background reading
Related
12 December 2019 press conference · 30 April 2020 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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