European Central Bank Press conference comparison — 10 December 2020 vs 11 March 2021

This European Central Bank press conference comparison covers 10 December 2020 and 11 March 2021. Overall, the newer document was more dovish. The ECB holds rates steady but accelerates PEPP purchases to counter rising yields, reinforcing its accommodative stance. The introduction of weak wage concerns and the immediate implementation of higher purchases signal a clear dovish tilt for the next decision.

What changed

More dovish. The ECB holds rates steady but accelerates PEPP purchases to counter rising yields, reinforcing its accommodative stance. The introduction of weak wage concerns and the immediate implementation of higher purchases signal a clear dovish tilt for the next decision.

Inflation — Little changed. Both documents emphasize persistently low underlying inflation; current document dismisses recent pickup as transitory, maintaining the dovish assessment.
Labour Market — More dovish. Current document introduces a new passage highlighting weak wage pressures, signalling a dovish addition absent in the prior document.
Rate Path — More dovish. Current document shifts from prior cautious expansion to an explicit commitment to significantly increase PEPP purchases immediately to counter rising yields, intensifying the easing stance.
Balance Sheet — Little changed. Prior document emphasized unlimited QE flexibility, while current document takes a more technical, non-committal stance on yield curve segments.

Key wording

10 December 2020

Inflation remains very low in the context of weak demand and significant slack in labour and product markets.
inflation: Confirms persistent low inflation due to economic slack.

Overall, the incoming data and our staff projections suggest a more pronounced near-term impact of the pandemic on the economy and a more protracted weakness in inflation than previously envisaged.
inflation: Downward revision to inflation outlook warrants continued accommodation.

the Governing Council decided to keep the key ECB interest rates unchanged.
rate path: No change in rates, as widely expected.

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 per cent within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
rate path: Lower rates possible; rate hikes conditional on sustained inflation convergence.

we decided to increase the envelope of the pandemic emergency purchase programme (PEPP) by €500 billion to a total of €1,850 billion. We also extended the horizon for net purchases under the PEPP to at least the end of March 2022.
balance sheet: Significant expansion of PEPP size and duration to support financing conditions.

We therefore continue to stand ready to adjust all of our instruments, as appropriate, to ensure that inflation moves towards our aim in a sustained manner, in line with our commitment to symmetry.
rate path: Reiterates conditional easing bias, signalling readiness to act.

11 March 2021

Inflation has picked up over recent months mainly on account of some transitory factors and an increase in energy price inflation. At the same time, underlying price pressures remain subdued in the context of weak demand and significant slack in labour and product markets.
inflation: Dismisses recent pick-up as transitory; emphasizes underlying weakness justifying continued stimulus.

Underlying price pressures are expected to increase somewhat this year due to current supply constraints and the recovery in domestic demand, although pressures are expected to remain subdued overall, also reflecting low wage pressures and the past appreciation of the euro.
inflation: Inflation outlook subdued despite temporary supply factors, supporting accommodative policy.

Market interest rates have increased since the start of the year, which poses a risk to wider financing conditions. If sizeable and persistent, increases in these market interest rates, when left unchecked, could translate into a premature tightening of financing conditions for all sectors of the economy.
rate path: Highlights concern over yield rise; rationalizes faster PEPP purchases to prevent tightening.

Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council expects purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year.
rate path: Signals immediate stepping up of QE to counter rising yields and maintain accommodation.

No, we are not focusing on any particular segment of the yield curve
balance sheet: Indicates flexible, holistic approach to yield curve management, avoiding market speculation on specific maturities.

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 per cent within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
rate path: Reiterates long-term low rate commitment, tying lift-off to realized inflation convergence.

Official documents

Background reading

10 December 2020 press conference · 11 March 2021 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology