European Central Bank Press conference comparison — 16 March 2023 vs 15 June 2023
This European Central Bank press conference comparison covers 16 March 2023 and 15 June 2023. Overall, the newer document was more hawkish. The ECB has shifted decisively hawkish across rate path and balance sheet, while introducing labour market concerns as an additional inflation risk. This signals further tightening in July and a prolonged period of restrictive policy, with no pivot in sight.
What changed
More hawkish. The ECB has shifted decisively hawkish across rate path and balance sheet, while introducing labour market concerns as an additional inflation risk. This signals further tightening in July and a prolonged period of restrictive policy, with no pivot in sight.
- Inflation — Little changed. Both documents describe inflation as too high for too long, but the current version notes that inflation 'has been coming down,' a slight improvement that does not alter the overall hawkish stance.
- Labour Market — More hawkish. The current document introduces a new focus on labour market tightness and wage pressures, a hawkish addition absent from the prior statement.
- Rate Path — More hawkish. The current statement delivers a 25bp hike with explicit guidance for another hike in July and a commitment to keep rates restrictive, a hawkish shift from prior mixed messaging.
- Balance Sheet — More hawkish. The current document announces an end to APP reinvestments and a large TLTRO repayment, a hawkish acceleration of balance sheet normalization compared to prior neutral stance.
Key wording
Inflation is projected to remain too high for too long.
Therefore, the Governing Council today decided to increase the three key ECB interest rates by 50 basis points, in line with our determination to ensure the timely return of inflation to our two per cent medium-term target.
the Governing Council today decided to increase the three key ECB interest rates by 50 basis points
The elevated level of uncertainty reinforces the importance of a data-dependent approach to our policy rate decisions, which will be determined by our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission.
We are monitoring current market tensions closely and stand ready to respond as necessary to preserve price stability and financial stability in the euro area.
Moreover, many firms were able to raise their profit margins in sectors faced with constrained supply and resurgent demand.
Inflation has been coming down but is projected to remain too high for too long.
The Governing Council therefore today decided to raise the three key ECB interest rates by 25 basis points.
The Governing Council therefore today decided to raise the three key ECB interest rates by 25 basis points
Our future decisions will ensure that the key ECB interest 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.
These higher borrowing rates, together with tighter credit supply conditions and lower loan demand, have further weakened credit dynamics.
Upside risks to inflation include potential renewed upward pressures on the costs of energy and food, also related to Russia’s war against Ukraine. A lasting rise in inflation expectations above our target, or higher than anticipated increases in wages or profit margins, could also drive inflation higher, including over the medium term. Recent wage agreements in a number of countries have added to the upside risks to inflation.
Official documents
Background reading
Related
16 March 2023 press conference · 15 June 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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