European Central Bank Statement comparison — 4 June 2020 vs 16 July 2020

This European Central Bank statement comparison covers 4 June 2020 and 16 July 2020. Overall, the newer document was broadly unchanged. The July statement holds the line after June's massive PEPP expansion, signalling a pause in additional easing while maintaining the accommodative stance. Next decision likely to remain on hold unless inflation outlook deteriorates further.

What changed

Broadly unchanged. The July statement holds the line after June's massive PEPP expansion, signalling a pause in additional easing while maintaining the accommodative stance. Next decision likely to remain on hold unless inflation outlook deteriorates further.

Inflation — Little changed. Inflation assessment remains dovish with reference to pandemic-related downward shift, but no new downgrade relative to June.
Labour Market — Little changed. Labour market not addressed in either document; no signal.
Rate Path — Little changed. Rate path language maintained: PEPP envelope and horizon unchanged, no additional easing measures, but continued commitment to accommodative stance.
Balance Sheet — Little changed. Balance sheet guidance carries over flexibility and reinvestment commitment; no new expansion or tightening signal.

Key wording

4 June 2020

The envelope for the pandemic emergency purchase programme (PEPP) will be increased by €600 billion to a total of €1,350 billion.
rate path: Larger-than-expected PEPP increase signals strong stimulus.

In response to the pandemic-related downward revision to inflation over the projection horizon, the PEPP expansion will further ease the general monetary policy stance, supporting funding conditions in the real economy, especially for businesses and households.
inflation: Inflation downgrade justifies increased stimulus.

The purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions.
rate path: Flexibility allows targeted response to market stress.

The horizon for net purchases under the PEPP will be extended to at least the end of June 2021.
rate path: Prolonged asset purchase commitment supports markets.

In any case, the Governing Council will conduct net asset purchases under the PEPP until it judges that the coronavirus crisis phase is over.
rate path: Open-ended conditionality tied to crisis ensures ongoing support.

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 on hold, as widely expected.

16 July 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: Rate decision unchanged, as expected; no surprise.

These purchases contribute to easing the overall monetary policy stance, thereby helping to offset the pandemic-related downward shift in the projected path of inflation.
inflation: Acknowledges pandemic has pushed inflation lower, justifying ongoing QE.

The Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.
rate path: Standard pledge; signals willingness to do more if needed, but no urgency.

The Governing Council will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,350 billion.
rate path: Full PEPP envelope maintained, signaling continued aggressive stimulus.

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: Explicitly leaves door open to rate cuts, tying normalization to robust inflation convergence.

The purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions.
rate path: Flexibility allows the ECB to address fragmentation risks and adjust as needed.

Official documents

Background reading

4 June 2020 statement · 16 July 2020 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology