European Central Bank Press conference comparison — 10 September 2020 vs 29 October 2020

This European Central Bank press conference comparison covers 10 September 2020 and 29 October 2020. Overall, the newer document was more dovish. The October statement signals a clear dovish shift, with the Governing Council pre-committing to recalibrate all instruments at the December meeting. This suggests a significant easing package is likely, including potential PEPP expansion or rate cuts, as the ECB responds to the second wave and downside risks.

What changed

More dovish. The October statement signals a clear dovish shift, with the Governing Council pre-committing to recalibrate all instruments at the December meeting. This suggests a significant easing package is likely, including potential PEPP expansion or rate cuts, as the ECB responds to the second wave and downside risks.

Inflation — Little changed. Both documents emphasize subdued inflation and negative near-term prints, but the current statement downplays exchange rate as a policy driver, leaving the inflation assessment broadly unchanged.
Labour Market — More dovish. The prior document lacked explicit labour market commentary, while the current introduces 'significant slack in labour and product markets,' signaling a new dovish concern.
Rate Path — More dovish. The current document pre-commits to recalibrating all instruments in December, a stronger dovish signal than the prior's conditional forward guidance.
Balance Sheet — More dovish. The current emphasizes full flexibility of PEPP and explicitly commits to responding to the second wave, marking a more accommodative stance on asset purchases and overall balance sheet.

Key wording

10 September 2020

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.

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 conduct net asset purchases under the PEPP until at least the end of June 2021 and, in any case, until the Governing Council judges that the coronavirus crisis phase is over.
rate path: Flexible end date tied to crisis, not calendar.

At the same time, in the current environment of elevated uncertainty, the Governing Council will carefully assess incoming information, including developments in the exchange rate, with regard to its implications for the medium-term inflation outlook.
rate path: First explicit mention of exchange rate in forward guidance signals increased monitoring; may foreshadow policy response if euro strengthens further.

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.

In the near term price pressures will remain subdued owing to weak demand, lower wage pressures and the appreciation of the euro exchange rate, despite some upward price pressures related to supply constraints.
inflation: Weak inflation outlook, euro appreciation adds downside risk.

29 October 2020

On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favourable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path.
rate path: Hints at future easing conditional on December projections.

We decided to reconfirm our accommodative monetary policy stance.
rate path: No policy change, maintains current stance.

On the basis of this updated assessment, the Governing Council will recalibrate its instruments as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favourable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path.
rate path: Explicit commitment to recalibrate all instruments in December, strongly dovish signal.

we agreed, all of us, that it was necessary to take action, and therefore to recalibrate our instruments at our next Governing Council meeting.
rate path: Pre-commits to recalibration of all instruments at December meeting, a clear dovish signal.

In the current environment of risks clearly tilted to the downside
rate path: Explicit downside risks justify potential easing.

Headline inflation is likely to remain negative until early 2021.
inflation: Negative inflation justifies accommodative policy.

Official documents

Background reading

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