European Central Bank Press conference comparison — 21 July 2022 vs 15 December 2022
This European Central Bank press conference comparison covers 21 July 2022 and 15 December 2022. Overall, the newer document was more hawkish. The ECB's December meeting delivers a more aggressive tightening stance than July: rates are raised by 50bp with explicit guidance for multiple further 50bp moves, and quantitative tightening begins in March. The next decision is likely another 50bp hike, with no pivot in sight.
What changed
More hawkish. The ECB's December meeting delivers a more aggressive tightening stance than July: rates are raised by 50bp with explicit guidance for multiple further 50bp moves, and quantitative tightening begins in March. The next decision is likely another 50bp hike, with no pivot in sight.
- Inflation — Little changed. Inflation rhetoric remains strongly hawkish in both documents, with upside risks highlighted; the slight decline in headline inflation in December does not materially shift the overall assessment.
- Labour Market — More hawkish. Labour market is newly emphasized in December as very tight, with rock-bottom unemployment cited as supporting further rate hikes, representing a new hawkish input absent in July.
- Rate Path — More hawkish. Forward guidance hardens from conditional normalization to explicit expectation of significant further rate increases at a steady pace, including multiple 50bp hikes, a clear hawkish escalation.
- Balance Sheet — More hawkish. Quantitative tightening is announced for March 2023, a new hawkish instrument complementing rate hikes, whereas July only introduced the conditional TPI.
Key wording
We decided to raise the three key ECB interest rates by 50 basis points and approved the Transmission Protection Instrument (TPI).
At our upcoming meetings, further normalisation of interest rates will be appropriate. The frontloading today of the exit from negative interest rates allows us to make a transition to a meeting-by-meeting approach to our interest rate decisions.
Price pressures are spreading across more and more sectors, in part owing to the indirect impact of high energy costs across the whole economy.
The risks to the inflation outlook continue to be on the upside and have intensified, particularly in the short term.
inflation continues to be undesirably high and is expected to remain above our target for some time. The latest data indicate a slowdown in growth, clouding the outlook for the second half of 2022 and beyond.
The Governing Council has today decided to raise the key ECB interest rates and approved the TPI.
The Governing Council today decided to raise the three key ECB interest rates by 50 basis points and, based on the substantial upward revision to the inflation outlook, we expect to raise them further.
In particular, we judge that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our two per cent medium-term target.
According to Eurostat’s flash estimate, inflation was 10.0 per cent in November, slightly lower than the 10.6 per cent recorded in October. The decline resulted mainly from lower energy price inflation. Food price inflation and underlying price pressures across the economy have strengthened and will persist for some time.
we judge that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our two per cent medium-term target.
Most measures of longer-term inflation expectations currently stand at around two per cent, although further above-target revisions to some indicators warrant continued monitoring.
We judge that interest rates will still have to rise significantly at a steady pace, to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our 2% medium-term target.
Official documents
Background reading
Related
21 July 2022 press conference · 15 December 2022 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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