European Central Bank Press conference comparison — 27 July 2023 vs 26 October 2023
This European Central Bank press conference comparison covers 27 July 2023 and 26 October 2023. Overall, the newer document was more dovish. The ECB pivoted from hiking to holding, acknowledging disinflation progress and labour market softening while reinforcing that rates will stay high for a sufficiently long duration. The next decision is likely a continued hold, with data dependence and no imminent cuts.
What changed
More dovish. The ECB pivoted from hiking to holding, acknowledging disinflation progress and labour market softening while reinforcing that rates will stay high for a sufficiently long duration. The next decision is likely a continued hold, with data dependence and no imminent cuts.
- Inflation — Little changed. Both documents emphasise persistent inflation above target, but current adds explicit acknowledgment of a marked drop and easing underlying measures, tempering the prior hawkish tone.
- Labour Market — More dovish. Current introduces labour market discussion noting a historical low unemployment but signs of weakening, indicating a new area of concern absent in prior.
- Rate Path — More dovish. Decision shifts from a 25bp hike to a hold, with new forward guidance that current rates are sufficient if maintained for long, signalling the tightening cycle has paused.
- Balance Sheet — Little changed. Both documents highlight strong transmission and financial stability risks; no material change in assessment.
Key wording
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.
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.
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.
we might hike and we might hold, and what is decided in September is not definitive.
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.
Upside risks to inflation could come from higher energy and food costs.
Even having a discussion on a cut is totally premature.
Official documents
Background reading
Related
27 July 2023 press conference · 26 October 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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