European Central Bank Statement comparison — 10 March 2022 vs 9 June 2022
This European Central Bank statement comparison covers 10 March 2022 and 9 June 2022. Overall, the newer document was more hawkish. The ECB's June statement represents a clear hawkish pivot: inflation concerns are elevated, rate hikes are imminent, and balance sheet reduction is confirmed. The next decision is highly likely to be a 25bp hike, with a larger step possible in September if inflation persists.
What changed
More hawkish. The ECB's June statement represents a clear hawkish pivot: inflation concerns are elevated, rate hikes are imminent, and balance sheet reduction is confirmed. The next decision is highly likely to be a 25bp hike, with a larger step possible in September if inflation persists.
- Inflation — More hawkish. Inflation concerns are newly introduced and intensified, with explicit upward revisions and broadening pressure, marking a stark hawkish turn.
- Labour Market — Little changed. Labour market conditions noted as strong in the current document, but prior document had no labour market assessment; no directional shift.
- Rate Path — More hawkish. Rate path guidance shifted from conditional tapering with dovish flexibility to explicit rate hike commitment and a sustained tightening cycle.
- Balance Sheet — More hawkish. Risk balance shifted from focusing on downside geopolitical risks that could delay normalization to a more balanced view, but the decisive end of APP signals a hawkish turn.
Key wording
The Russian invasion of Ukraine is a watershed for Europe.
Monthly net purchases under the APP will amount to €40 billion in April, €30 billion in May and €20 billion in June.
If the incoming data support the expectation that the medium-term inflation outlook will not weaken even after the end of its net asset purchases, the Governing Council will conclude net purchases under the APP in the third quarter.
If the medium-term inflation outlook changes and if financing conditions become inconsistent with further progress towards the 2% target, the Governing Council stands ready to revise its schedule for net asset purchases in terms of size and/or duration.
The Governing Council also intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates and, in any case, for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.
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.
Russia’s unjustified aggression towards Ukraine continues to weigh on the economy in Europe and beyond. It is disrupting trade, is leading to shortages of materials, and is contributing to high energy and commodity prices. These factors will continue to weigh on confidence and dampen growth, especially in the near term.
The Governing Council decided to end net asset purchases under its asset purchase programme (APP) as of 1 July 2022.
If the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting.
Beyond September, based on its current assessment, the Governing Council anticipates that a gradual but sustained path of further increases in interest rates will be appropriate.
the Governing Council intends to raise the key ECB interest rates by 25 basis points at its July monetary policy meeting.
But inflation pressures have broadened and intensified, with prices for many goods and services increasing strongly.
Official documents
Background reading
Related
10 March 2022 statement · 9 June 2022 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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