European Central Bank Press conference comparison — 12 March 2020 vs 10 September 2020

This European Central Bank press conference comparison covers 12 March 2020 and 10 September 2020. Overall, the newer document was mixed. The ECB maintains its accommodative stance but shifts from aggressive balance sheet expansion to a waiting posture, while highlighting new inflation risks from euro appreciation. This signals a cautious hold on further QE unless inflation weakens further, with the next decision likely to maintain current settings.

What changed

Mixed. The ECB maintains its accommodative stance but shifts from aggressive balance sheet expansion to a waiting posture, while highlighting new inflation risks from euro appreciation. This signals a cautious hold on further QE unless inflation weakens further, with the next decision likely to maintain current settings.

Inflation — More dovish. Current document highlights subdued inflation pressures and downside risk from euro appreciation, a shift from prior neutral inflation forecast.
Labour Market — Little changed. No significant labour market signals in current document; prior noted resilient labour costs, but no shift evident.
Rate Path — Little changed. Both documents maintain dovish forward guidance with rates at present or lower levels until inflation robustly converges; no directional change.
Balance Sheet — More hawkish. Prior announced a €120bn QE increase, while current merely reconfirms the existing PEPP envelope without new expansion, a relative hawkish tilt.

Key wording

12 March 2020

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.
rate path: Acknowledges coronavirus as a 'major shock' – justifies massive policy response and opens door to more.

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.
rate path: Unprecedented QE top-up – sizeable and front-loaded support to counter coronavirus shock.

the Governing Council 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 on hold with explicit downside bias – signals readiness to cut if inflation fails to converge.

The risks surrounding the euro area growth outlook are clearly on the downside.
rate path: Explicit downside risk language – strengthens case for further easing if conditions deteriorate.

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.
rate path: Explicitly acknowledges increased downside risks, supporting expectations of further easing.

While labour cost pressures have so far remained resilient amid tighter labour markets, the weaker growth momentum is delaying their pass-through to inflation.
labour market: Labour resilience noted but not translating to inflation, indicating muted underlying pressures.

10 September 2020

Overall, the balance of risks to the euro area growth outlook is seen to remain on the downside.
rate path: Downside risks from pandemic, implies continued accommodation.

We will continue our purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,350 billion.
rate path: Reconfirms PEPP size, no change in stance.

We will 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: Rate path conditional on inflation convergence, signals prolonged low rates.

the appreciation of the euro exercises a negative pressure on prices, we have to monitor carefully such a matter.
rate path: Euro appreciation is a downside risk to inflation, may require more accommodation.

deflationary risks which were slightly higher back in June in our latest projections have receded in September.
rate path: Deflation risks receding reduces urgency for additional easing, but the statement is cautious.

We increased the size of PEPP back in June and that was clearly intended to respond to the circumstances and to make sure that all the consequences resulting from the pandemic could be addressed through that Pandemic Emergency Programme, whether it related to fragmentation, to financial instability, or to the monetary stance that was a direct consequence of the pandemic.
rate path: Justifies past PEPP expansion as necessary to counteract pandemic effects, signalling willingness to act again if needed.

Official documents

Background reading

12 March 2020 press conference · 10 September 2020 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology