European Central Bank Press conference comparison — 14 September 2023 vs 25 January 2024

This European Central Bank press conference comparison covers 14 September 2023 and 25 January 2024. Overall, the newer document was more dovish. The ECB paused its hiking cycle while pushing back against market rate cut expectations, maintaining a cautious stance. The next decision will depend on incoming data, with the Committee likely to hold until clearer disinflation progress is achieved.

What changed

More dovish. The ECB paused its hiking cycle while pushing back against market rate cut expectations, maintaining a cautious stance. The next decision will depend on incoming data, with the Committee likely to hold until clearer disinflation progress is achieved.

Inflation — More dovish. Inflation assessment shifted from still too high with upside risks to broad-based decline in underlying inflation, indicating progress.
Labour Market — Little changed. Labour market language remains robust but now includes signs of wage growth slowing, resulting in a mixed picture.
Rate Path — More dovish. The Governing Council shifted from a 25bp hike to a hold, while explicitly arguing that rate cuts are premature, creating a tension between action and rhetoric.
Balance Sheet — Little changed. Risk balance remains balanced, with geopolitical upside risks and weak growth downside risks.

Key wording

14 September 2023

Inflation continues to decline but is still expected to remain too high for too long.
inflation: Inflation still too high, justifying further action.

In order to reinforce progress towards our target, the Governing Council today decided to raise the three key ECB interest rates by 25 basis points.
rate path: Rate hike of 25bp, confirming tightening bias.

the Governing Council today decided to raise the three key ECB interest rates by 25 basis points.
rate path: 25bp hike confirms tightening, but markets are more focused on the end of the cycle.

the Governing Council today decided to raise the three key ECB interest rates by 25 basis points
rate path: Confirms the 25 bp hike, the main policy decision.

Based on our current assessment, we consider that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target.
rate path: Signals rates at or near peak, but need to keep them high for long.

Based on our current assessment, we consider that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target. Our future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary.
rate path: Signals rates may be at peak but need to stay high for long; conditionality on data.

25 January 2024

Almost all measures of underlying inflation declined further in December.
inflation: Core inflation falling supports case for eventual rate cuts.

The Governing Council today decided to keep the three key ECB interest rates unchanged.
rate path: Rates left unchanged as expected, confirming pause.

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.
rate path: Hints at prolonged maintenance of high rates despite market expectations of cuts.

Upside risks to inflation include the heightened geopolitical tensions, especially in the Middle East, which could push energy prices and freight costs higher in the near term and hamper global trade. By contrast, inflation may surprise on the downside if monetary policy dampens demand by more than expected.
rate path: Balanced risks to inflation with geopolitical upside and demand downside.

First of all, the consensus around the table of the Governing Council was that it was premature to discuss rate cuts.
rate path: Rate cuts not on the table yet; reinforces data-dependent wait-and-see.

the consensus around the table of the Governing Council this morning was that it was premature to discuss rate cuts.
rate path: Explicit statement that rate cuts are not yet on the table; pushes back against market pricing.

Official documents

Background reading

14 September 2023 press conference · 25 January 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology