European Central Bank Statement comparison — 10 December 2020 vs 11 March 2021
This European Central Bank statement comparison covers 10 December 2020 and 11 March 2021. Overall, the newer document was more dovish. The March 2021 ECB statement maintains a highly accommodative stance but shifts from unconditional QE expansion to conditional pace acceleration, a subtle hawkish nuance relative to December's aggressive easing. For the next decision, the ECB signals data-dependent flexibility, adjusting purchase pace as needed without pre-committing to further envelope increases.
What changed
More dovish. The March 2021 ECB statement maintains a highly accommodative stance but shifts from unconditional QE expansion to conditional pace acceleration, a subtle hawkish nuance relative to December's aggressive easing. For the next decision, the ECB signals data-dependent flexibility, adjusting purchase pace as needed without pre-committing to further envelope increases.
- Inflation — Little changed. Inflation conditionality unchanged; both statements link rate path to sustained convergence to 2%.
- Labour Market — Little changed. Labour market not addressed in either statement; no signal.
- Rate Path — More dovish. ECB accelerated PEPP purchases to counter tightening financing conditions, while maintaining flexibility on envelope usage; forward guidance on rates unchanged.
- Balance Sheet — Little changed. PEPP envelope unchanged from December but pace accelerated; conditionality introduced on full usage, a slight nuance from prior's open-ended commitment.
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 per cent, 0.25 per cent and -0.50 per cent 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 per cent within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.
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.
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 further recalibrate the conditions of the third series of targeted longer-term refinancing operations (TLTRO III). Specifically, it decided to extend the period over which considerably more favourable terms will apply by twelve months, to June 2022.
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 purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year.
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.
Net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion.
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 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 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.
Official documents
Background reading
Related
10 December 2020 statement · 11 March 2021 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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