European Central Bank Statement comparison — 12 September 2019 vs 23 January 2020

This European Central Bank statement comparison covers 12 September 2019 and 23 January 2020. Overall, the newer document was broadly unchanged. The ECB held rates steady and maintained its asset purchases and forward guidance, pausing after the September easing package. The statement signals a wait-and-see approach, with the strategy review hinting at possible future changes but no near-term policy shift.

What changed

Broadly unchanged. The ECB held rates steady and maintained its asset purchases and forward guidance, pausing after the September easing package. The statement signals a wait-and-see approach, with the strategy review hinting at possible future changes but no near-term policy shift.

Inflation — Little changed. Inflation outlook language unchanged; convergence condition repeated verbatim.
Labour Market — Little changed. Labour market not addressed in either set of key passages; no shift.
Rate Path — Little changed. Rates held unchanged after September's cut; forward guidance repeats lower-for-longer commitment.
Balance Sheet — Little changed. QE continues at same pace and reinvestment guidance unchanged; no new balance sheet measures.

Key wording

12 September 2019

The interest rate on the deposit facility will be decreased by 10 basis points to -0.50%.
rate path: Direct cut signals easing bias.

The Governing Council now expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
rate path: Lower-for-longer commitment; no rate hikes before inflation converges.

Net purchases will be restarted under the Governing Council’s asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November.
rate path: QE restart provides additional accommodation.

Reinvestments of the principal payments from maturing securities purchased under the APP will continue, in full, for an extended period of time past the date when the Governing Council starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.
rate path: Reinvestment beyond rate hikes signals prolonged accommodation.

The interest rate in each operation will now be set at the level of the average rate applied in the Eurosystem’s main refinancing operations over the life of the respective TLTRO. For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III operations will be lower, and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation.
rate path: TLTRO III terms eased; rates can go as low as -0.50% for qualifying banks.

In order to support the bank-based transmission of monetary policy, a two-tier system for reserve remuneration will be introduced, in which part of banks’ holdings of excess liquidity will be exempt from the negative deposit facility rate.
rate path: Tiering reduces cost of negative rates for banks, supporting lending.

23 January 2020

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 -0.50% respectively.
rate path: Rates unchanged as expected; no surprise.

The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
rate path: Rates at present or lower until inflation converges, signaling long-term accommodation.

The Governing Council will continue to make net purchases under its asset purchase programme (APP) at a monthly pace of €20 billion.
rate path: QE continues at current pace, maintaining stimulus.

The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.
rate path: Reinvestment persists beyond rate hikes, ensuring continued accommodation.

The Governing Council also decided to launch a review of the ECB’s monetary policy strategy.
rate path: Strategy review signals potential future policy changes but no immediate impact.

Official documents

Background reading

12 September 2019 statement · 23 January 2020 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology