European Central Bank Press conference comparison — 15 December 2022 vs 4 May 2023
This European Central Bank press conference comparison covers 15 December 2022 and 4 May 2023. Overall, the newer document was more hawkish. The ECB delivered a mixed signal: slower rate hikes but faster QT, while inflation rhetoric held steady and labour market strength surprised to the upside. The overall stance remains tightening-biased, but the shift in the policy mix suggests the committee is adjusting the composition of tightening rather than the direction.
What changed
More hawkish. The ECB delivered a mixed signal: slower rate hikes but faster QT, while inflation rhetoric held steady and labour market strength surprised to the upside. The overall stance remains tightening-biased, but the shift in the policy mix suggests the committee is adjusting the composition of tightening rather than the direction.
- Inflation — Little changed. Inflation remains characterized as too high and persistent with upside risks; no material change in assessment.
- Labour Market — More hawkish. Labour market description shifted from expecting softening to highlighting a new historical low, indicating stronger conditions than anticipated.
- Rate Path — More dovish. Rate hike pace reduced from 50bp to 25bp, though forward guidance retains commitment to further tightening; the net effect is a dovish tilt in the speed of adjustment.
- Balance Sheet — More hawkish. Quantitative tightening pace accelerated from €15bn to about €25bn per month, representing a hawkish increase in balance sheet reduction.
Key wording
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.
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.
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.
From the beginning of March 2023 onwards, the asset purchase programme (APP) portfolio will decline at a measured and predictable pace, as the Eurosystem will not reinvest all of the principal payments from maturing securities. The decline will amount to €15 billion per month on average until the end of the second quarter of 2023 and its subsequent pace will be determined over time.
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.
the Governing Council today decided to raise the three key ECB interest rates by 25 basis points.
At the same time, our past rate increases are being transmitted forcefully to euro area financing and monetary conditions, while the lags and strength of transmission to the real economy remain uncertain.
Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our two per cent medium-term target and will be kept at those levels for as long as necessary.
we are not pausing. Under the present circumstances and based on what we have, which is the baseline of March, we know that we have more ground to cover.
the APP is let to run down gradually over the course of time, which will be an average of 25 billion per month that will not be reinvested, roughly.
The inflation outlook continues to be too high for too long.
Official documents
Background reading
Related
15 December 2022 press conference · 4 May 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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