European Central Bank Statement comparison — 10 September 2020 vs 29 October 2020
This European Central Bank statement comparison covers 10 September 2020 and 29 October 2020. Overall, the newer document was more dovish. The October statement is more dovish on the rate path, explicitly acknowledging downside risks and flagging a possible December easing, while balance sheet and inflation language remain broadly unchanged. This signals that the ECB is preparing to deliver additional accommodation at the next meeting, likely through rate cuts or enhanced asset purchases.
What changed
More dovish. The October statement is more dovish on the rate path, explicitly acknowledging downside risks and flagging a possible December easing, while balance sheet and inflation language remain broadly unchanged. This signals that the ECB is preparing to deliver additional accommodation at the next meeting, likely through rate cuts or enhanced asset purchases.
- Inflation — Little changed. No current key passage on inflation; prior's readiness to adjust instruments was not reiterated, implying no new signal on inflation stance.
- Labour Market — Little changed. No passages on labour market in either document, indicating no shift.
- Rate Path — More dovish. Current document adds explicit downside risk assessment and hints at further easing in December, while retaining lower-for-longer guidance, marking a clear dovish shift.
- Balance Sheet — Little changed. PEPP envelope unchanged and APP linkage reaffirmed, but omission of flexible purchase language and APP monthly pace suggest no material change in balance sheet stance.
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 -0.50% respectively.
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.
The Governing Council will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,350 billion. These purchases contribute to easing the overall monetary policy stance, thereby helping to offset the downward impact of the pandemic on the projected path of inflation.
The purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions. This allows the Governing Council to effectively stave off risks to the smooth transmission of monetary policy.
The Governing Council will conduct net asset purchases under the PEPP until at least the end of June 2021 and, in any case, until it judges that the coronavirus crisis phase is over.
Net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year.
In the current environment of risks clearly tilted to the downside, the Governing Council will carefully assess the incoming information, including the dynamics of the pandemic, prospects for a rollout of vaccines and developments in the exchange rate.
The new round of Eurosystem staff macroeconomic projections in December will allow a thorough reassessment of the economic outlook and the balance of risks. On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favourable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path.
Official documents
Background reading
Related
10 September 2020 statement · 29 October 2020 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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