European Central Bank Statement comparison — 7 March 2019 vs 25 July 2019
This European Central Bank statement comparison covers 7 March 2019 and 25 July 2019. Overall, the newer document was more dovish. The ECB statement shifts substantially dovish, introducing inflation shortfall language, extending rate guidance to allow cuts, and preparing for additional easing tools including QE. The next decision likely includes a rate cut and possibly renewed asset purchases.
What changed
More dovish. The ECB statement shifts substantially dovish, introducing inflation shortfall language, extending rate guidance to allow cuts, and preparing for additional easing tools including QE. The next decision likely includes a rate cut and possibly renewed asset purchases.
- Inflation — More dovish. Current document introduces explicit acknowledgment of persistent inflation shortfall below target, shifting from no prior inflation commentary to a clear dovish concern.
- Labour Market — Little changed. Neither prior nor current documents contain labour market passages, implying no shift.
- Rate Path — More dovish. Prior guidance for rates unchanged through end-2019 is extended to 'present or lower levels at least through first half of 2020', with added strong easing bias and readiness to cut.
- Balance Sheet — More dovish. Current document maintains reinvestment commitment and adds explicit readiness to adjust all instruments including QE, with committees examining options for further easing, including tiering.
Key wording
The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.
The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term.
A new series of quarterly targeted longer-term refinancing operations (TLTRO-III) will be launched, starting in September 2019 and ending in March 2021, each with a maturity of two years.
Under TLTRO-III, counterparties will be entitled to borrow up to 30% of the stock of eligible loans as at 28 February 2019 at a rate indexed to the interest rate on the main refinancing operations over the life of each operation.
Like the outstanding TLTRO programme, TLTRO-III will feature built-in incentives for credit conditions to remain favourable.
At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively.
The Governing Council expects the key ECB interest rates to remain at their present or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to its aim over the medium term.
Accordingly, if the medium-term inflation outlook continues to fall short of its aim, the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim.
It therefore stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner.
The Governing Council also underlined the need for a highly accommodative stance of monetary policy for a prolonged period of time, as inflation rates, both realised and projected, have been persistently below levels that are in line with its aim.
Official documents
Background reading
Related
7 March 2019 statement · 25 July 2019 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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