European Central Bank Statement comparison — 29 October 2020 vs 11 March 2021

This European Central Bank statement comparison covers 29 October 2020 and 11 March 2021. Overall, the newer document was more dovish. The March 2021 ECB statement delivers on the dovish signals from October 2020 by accelerating PEPP purchases, marking a clear easing action. The next decision is likely to maintain an accommodative stance with flexibility to adjust the PEPP envelope as needed.

What changed

More dovish. The March 2021 ECB statement delivers on the dovish signals from October 2020 by accelerating PEPP purchases, marking a clear easing action. The next decision is likely to maintain an accommodative stance with flexibility to adjust the PEPP envelope as needed.

Inflation — Little changed. No direct mention of inflation in key passages; inflation rhetoric remains unchanged.
Labour Market — Little changed. Labour market not addressed in either document; no shift.
Rate Path — More dovish. Forward guidance shifts from hinting at further easing in December (prior) to delivering faster PEPP purchases (current), while maintaining lower-for-longer rate guidance; overall dovish shift.
Balance Sheet — More dovish. Prior maintained PEPP envelope but extended duration; current accelerates PEPP purchases, signalling a more expansionary balance sheet stance; dovish shift.

Key wording

29 October 2020

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.
rate path: Acknowledges downside risks explicitly, setting a dovish tone.

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.
rate path: Strong hint at further easing in December to maintain favourable conditions.

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 widely expected.

The Governing Council will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,350 billion.
rate path: PEPP envelope unchanged, but no increase signalled now.

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.
rate path: Extends PEPP duration with an open-ended condition, supporting accommodation.

The Governing Council continues to expect monthly net asset purchases under the APP to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.
rate path: APP purchases linked to rate path, implying continued support.

11 March 2021

The Governing Council stands 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: Reaffirms commitment to act if inflation undershoots, but no immediate action.

If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full. Equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation.
rate path: Conditionality on PEPP envelope size gives flexibility to adjust as needed.

The Governing Council expects purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year.
rate path: Signals acceleration of QE to counter recent tightening of financing conditions.

Net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion.
rate path: APP kept unchanged, consistent with previous guidance.

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: No change to policy rates, as widely expected.

Official documents

Background reading

29 October 2020 statement · 11 March 2021 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology