European Central Bank Press conference comparison — 25 January 2024 vs 6 June 2024

This European Central Bank press conference comparison covers 25 January 2024 and 6 June 2024. Overall, the newer document was more hawkish. The June 2024 meeting marks the first rate cut of the cycle, representing a dovish pivot in policy action, but the accompanying rhetoric remains hawkish on inflation and labour market persistence. The overall message is a cautious start to easing, with subsequent cuts dependent on further disinflation progress and data.

What changed

More hawkish. The June 2024 meeting marks the first rate cut of the cycle, representing a dovish pivot in policy action, but the accompanying rhetoric remains hawkish on inflation and labour market persistence. The overall message is a cautious start to easing, with subsequent cuts dependent on further disinflation progress and data.

Inflation — More hawkish. Inflation assessment shifted from focusing on declining underlying inflation to highlighting persistent domestic price pressures and upward revisions to the staff projections.
Labour Market — More hawkish. Labour market language moved from mixed signals (robust employment but slowing wages) to emphasizing elevated wage growth as a source of inflation persistence.
Rate Path — More dovish. Despite cautious forward guidance, the actual policy action of a 25bp cut represents a clear dovish shift from the prior hold.
Balance Sheet — Little changed. No balance sheet policy signals were present in either document, so no shift.

Key wording

25 January 2024

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.

The labour market has remained robust. The unemployment rate, at 6.4 per cent in November, has fallen back to its lowest level since the start of the euro.
labour market: Low unemployment supports wage growth, adding to inflation persistence.

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

6 June 2024

The Governing Council today decided to lower the three key ECB interest rates by 25 basis points.
rate path: First rate cut in cycle, signals start of easing.

We will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. We will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction. In particular, our interest rate decisions will be based on 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 not pre-committing to a particular rate path.
rate path: Restrictive stance maintained, no pre-commitment to easing cycle.

Wages are still rising at an elevated pace, making up for the past inflation surge.
labour market: Wage growth supports sticky inflation, delaying rate cuts.

At the same time, despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year.
inflation: Highlights persistent inflation, limiting scope for further cuts.

The risks to economic growth are balanced in the near term but remain tilted to the downside over the medium term.
rate path: Downside risks to growth could justify faster easing if materialize.

Inflation could turn out higher than anticipated if wages or profits increase by more than expected. Upside risks to inflation also stem from the heightened geopolitical tensions, which could push energy prices and freight costs higher in the near term and disrupt global trade.
rate path: Explicit upside risks to inflation from wages and geopolitics.

Official documents

Background reading

25 January 2024 press conference · 6 June 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology