European Central Bank Press conference comparison — 15 June 2023 vs 26 October 2023
This European Central Bank press conference comparison covers 15 June 2023 and 26 October 2023. Overall, the newer document was more dovish. The ECB pivoted from actively hiking rates to a data-dependent hold, with a high-for-longer stance replacing explicit forward guidance on further hikes. This signals a sustained pause, with the next move likely a cut only after inflation data confirms sustainable progress.
What changed
More dovish. The ECB pivoted from actively hiking rates to a data-dependent hold, with a high-for-longer stance replacing explicit forward guidance on further hikes. This signals a sustained pause, with the next move likely a cut only after inflation data confirms sustainable progress.
- Inflation — More dovish. The inflation narrative shifted from exclusively highlighting persistent inflation and upside risks to acknowledging both stickiness and recent declines, a net dovish softening.
- Labour Market — More dovish. Prior emphatic tightness and wage-push inflation concerns gave way to a more balanced assessment acknowledging softening signs, a dovish shift.
- Rate Path — More dovish. The explicit hiking path and July guidance were replaced by a unanimous hold with high-for-longer language but no commitment to further hikes, marking a clear dovish pivot.
- Balance Sheet — More dovish. The prior focus on active balance sheet reduction (TLTRO, APP) shifted to acknowledging financial stability risks from higher yields, a dovish turn.
Key wording
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.
The labour market remains a source of strength. Almost a million new jobs were added in the first quarter of the year and the unemployment rate stood at its historical low of 6.5 per cent in April.
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.
Inflation is still expected to stay too high for too long, and domestic price pressures remain strong.
The Governing Council today decided to keep the three key ECB interest rates unchanged.
Based on our current assessment, we consider that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal.
Based on our current assessment, we consider that rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target.
The unemployment rate stood at a historical low of 6.4 per cent in August. At the same time, there are signs that the labour market is weakening.
Upside risks to inflation could come from higher energy and food costs.
Official documents
Background reading
Related
15 June 2023 press conference · 26 October 2023 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.