European Central Bank Statement comparison — 29 October 2020 vs 10 December 2020
This European Central Bank statement comparison covers 29 October 2020 and 10 December 2020. Overall, the newer document was more dovish. The ECB delivered a substantial easing package in December 2020, increasing PEPP by €500 billion and extending TLTRO conditions, while keeping rates unchanged. This signals a decisive dovish stance and readiness to act further if needed.
What changed
More dovish. The ECB delivered a substantial easing package in December 2020, increasing PEPP by €500 billion and extending TLTRO conditions, while keeping rates unchanged. This signals a decisive dovish stance and readiness to act further if needed.
- Inflation — Little changed. No explicit inflation passages; inflation assessment unchanged from prior meeting.
- Labour Market — Little changed. No explicit labour market passages; no change in characterisation.
- Rate Path — More dovish. Rates unchanged but substantial new easing measures (PEPP increase, TLTRO extension) and dovish forward guidance represent a clear dovish shift.
- Balance Sheet — More dovish. PEPP envelope increased by €500 billion and extended with open-ended conditionality, marking a significant easing of balance sheet policy.
Key wording
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.
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.
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.
At the same time, uncertainty remains high, including with regard to the dynamics of the pandemic and the timing of vaccine roll-outs.
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 per cent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
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 per cent, 0.25 per cent and -0.50 per cent respectively.
In any case, the Governing Council will conduct net purchases until it judges that the coronavirus crisis phase is over.
the Governing Council decided to increase the envelope of the pandemic emergency purchase programme (PEPP) by €500 billion to a total of €1,850 billion. It also extended the horizon for net purchases under the PEPP to at least the end of March 2022.
The Governing Council therefore 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.
Official documents
Background reading
Related
29 October 2020 statement · 10 December 2020 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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