European Central Bank Press conference comparison — 4 May 2023 vs 27 July 2023
This European Central Bank press conference comparison covers 4 May 2023 and 27 July 2023. Overall, the newer document was more dovish. The ECB in July 2023 delivered a 25bp hike but softened the forward guidance, opening the door to a potential pause. The next decision is data-dependent with a 'decisive maybe' on further hikes, as inflation rhetoric balances hawkish persistence with nascent dovish cues.
What changed
More dovish. The ECB in July 2023 delivered a 25bp hike but softened the forward guidance, opening the door to a potential pause. The next decision is data-dependent with a 'decisive maybe' on further hikes, as inflation rhetoric balances hawkish persistence with nascent dovish cues.
- Inflation — Little changed. Inflation rhetoric remains hawkish overall but introduces a dovish element regarding second-round effects not materializing, indicating reduced urgency.
- Labour Market — Little changed. No labour market passages in the current document; the prior hawkish characterisation of tight labour market is absent, implying a neutral stance.
- Rate Path — More dovish. Rate guidance softens from explicit 'not pausing' to a data-dependent 'might hike or hold', signalling a potential pause.
- Balance Sheet — More dovish. Balance sheet language adds dovish signal with sharp slowing in credit growth, indicating strong transmission and reducing need for further tightening.
Key wording
The inflation outlook continues to be too high for too long.
the Governing Council today decided to raise the three key ECB interest rates by 25 basis points.
Headline inflation has declined over recent months, but underlying price pressures remain strong.
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.
the unemployment rate falling to a new historical low of 6.5 per cent in March.
Inflation continues to decline but is still expected 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.
Upside risks to inflation include potential renewed upward pressures on the costs of energy and food, also related to Russia's unilateral withdrawal from the Black Sea Grain Initiative.
Our future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to our two per cent medium-term target.
Our future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to our two per cent medium-term target. We will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
The determination is rooted in one very simply direction: 2%. We want to break the back of inflation. 2% is the goal and we will get there, come what may.
Official documents
Background reading
Related
4 May 2023 press conference · 27 July 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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