European Central Bank Press conference comparison — 9 June 2022 vs 27 October 2022
This European Central Bank press conference comparison covers 9 June 2022 and 27 October 2022. Overall, the newer document was more hawkish. Overall, the ECB has significantly tightened its stance with a 75bp rate hike and TLTRO tightening, while maintaining a hawkish inflation narrative. Despite acknowledging recession risks, the commitment to further rate hikes signals that inflation remains the priority, and markets should expect additional tightening at upcoming meetings.
What changed
More hawkish. Overall, the ECB has significantly tightened its stance with a 75bp rate hike and TLTRO tightening, while maintaining a hawkish inflation narrative. Despite acknowledging recession risks, the commitment to further rate hikes signals that inflation remains the priority, and markets should expect additional tightening at upcoming meetings.
- Inflation — Little changed. Both documents describe inflation as undesirably high and above target, with no material shift in characterisation.
- Labour Market — Little changed. Labour market language remains broadly similar, with prior acknowledging tightness and wage growth but dismissing spiral risks, and current noting strong labour; no directional change.
- Rate Path — More hawkish. The current document delivers a 75bp hike and signals further hikes, whereas the prior only committed to a 25bp July hike with a conditional larger September hike; the tone is unambiguously more hawkish.
- Balance Sheet — More hawkish. The current document introduces balance sheet tightening via TLTRO repricing, a hawkish shift from no mention in the prior.
Key wording
The new staff projections foresee annual inflation at 6.8 per cent in 2022, before it is projected to decline to 3.5 per cent in 2023 and 2.1 per cent in 2024 – higher than in the March projections. This means that headline inflation at the end of the projection horizon is projected to be slightly above our target.
we decided to end net asset purchases under our asset purchase programme (APP) as of 1 July 2022. we intend to raise the key ECB interest rates by 25 basis points at our July monetary policy meeting.
we intend to raise the key ECB interest rates by 25 basis points at our July monetary policy meeting.
Looking further ahead, we expect to raise the key ECB interest rates again in September. If the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at our September meeting.
The labour market continues to improve, with unemployment remaining at its historical low of 6.8 per cent in April. Job vacancies across many sectors show that there is robust demand for labour.
Risks relating to the pandemic have declined but the war continues to be a significant downside risk to growth. In particular, a major risk would be a further disruption in the energy supply to the euro area
Inflation remains far too high and will stay above our target for an extended period.
The Governing Council today decided to raise the three key ECB interest rates by 75 basis points.
We took today’s decision, and expect to raise interest rates further, to ensure the timely return of inflation to our two per cent medium-term inflation target.
today we have raised the three key ECB interest rates by 75 basis points, and expect to raise interest rates further, to ensure the timely return of inflation to our medium-term target.
We still see very strong labour
We are very much and deliberately turning our back to forward guidance, which is not helpful in the current circumstances given the level of uncertainty that we have pretty much all around.
Official documents
Background reading
Related
9 June 2022 press conference · 27 October 2022 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
The Cadence Brief
The one number that moved central bank pricing — delivered each weekday morning.