European Central Bank Press conference comparison — 10 June 2021 vs 9 September 2021
This European Central Bank press conference comparison covers 10 June 2021 and 9 September 2021. Overall, the newer document was more hawkish. The ECB delivered a modest hawkish recalibration by slowing PEPP purchases, while reaffirming that rates will stay low and inflation is transitory. The next decision in December will determine the future of the PEPP and whether the tapering path continues.
What changed
More hawkish. The ECB delivered a modest hawkish recalibration by slowing PEPP purchases, while reaffirming that rates will stay low and inflation is transitory. The next decision in December will determine the future of the PEPP and whether the tapering path continues.
- Inflation — Little changed. Both documents stress transitory inflation pressures; current document adds upside risk from supply bottlenecks but maintains overall dovish assessment.
- Labour Market — Little changed. Prior emphasized labour slack and scarring; current notes rapid improvement but still no strong wage pressures, shifting from dovish to a more balanced view.
- Rate Path — More hawkish. Prior maintained elevated PEPP and ruled out taper talk; current announces a moderately lower PEPP pace, signalling a hawkish operational shift despite retaining low rate guidance.
- Balance Sheet — More hawkish. Prior kept PEPP purchases at a significantly higher pace; current reduces that pace, indicating a tightening of balance sheet expansion.
Key wording
Inflation has picked up over recent months, largely on account of base effects, transitory factors and an increase in energy prices. It is expected to rise further in the second half of the year, before declining as temporary factors fade out.
a sustained rise in market rates could translate into a tightening of wider financing conditions that are relevant for the entire economy. Such a tightening would be premature and would pose a risk to the ongoing economic recovery and the outlook for inflation.
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 per cent within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council expects net purchases under the PEPP over the coming quarter to continue to be conducted at a significantly higher pace than during the first months of the year.
Overall, we see the risks surrounding the euro area growth outlook as broadly balanced.
Headline inflation is likely to increase further towards the autumn, reflecting mainly the reversal of the temporary VAT reduction in Germany. Inflation is expected to decline again at the start of next year as temporary factors fade out and global energy prices moderate.
The current increase in inflation is expected to be largely temporary and underlying price pressures are building up only slowly.
We see the risks to the economic outlook as broadly balanced.
We stand ready to adjust all of our instruments, as appropriate, to ensure that inflation stabilises at our two per cent target over the medium term.
Our policy measures, including our revised forward guidance on the key ECB interest rates, are key to helping the economy shift to a sustained recovery and, ultimately, to bringing inflation to our two per cent target.
However, many firms and households have taken on more debt during the pandemic. A deterioration in the economic outlook could threaten their financial health.
The current rise in inflation is expected to be largely temporary and underlying price pressures will build up only gradually.
Official documents
Background reading
Related
10 June 2021 press conference · 9 September 2021 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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