European Central Bank Statement comparison — 9 June 2022 vs 8 September 2022
This European Central Bank statement comparison covers 9 June 2022 and 8 September 2022. Overall, the newer document was more hawkish. The ECB has significantly tightened policy with a 75bp hike, frontloading normalisation, while acknowledging a sharp growth slowdown. The overall direction is aggressively hawkish on inflation but with growing concern about the economy, potentially setting up a more cautious pace after the frontloading.
What changed
More hawkish. The ECB has significantly tightened policy with a 75bp hike, frontloading normalisation, while acknowledging a sharp growth slowdown. The overall direction is aggressively hawkish on inflation but with growing concern about the economy, potentially setting up a more cautious pace after the frontloading.
- Inflation — More hawkish. Current document highlights inflation reaching 9.1% and projects it above target throughout the horizon, reinforcing the urgency versus the prior document's recognition of broadening pressures.
- Labour Market — More dovish. Current document downgrades the growth outlook to stagnation, contrasting with the prior document's view of a supportive labour market.
- Rate Path — More hawkish. The current document delivers a 75bp hike and reiterates expectation of further hikes, despite slowing growth, marking a stronger tightening pace than the prior document.
- Balance Sheet — Little changed. The prior document acknowledged downside risks from the war, while the current document does not explicitly update the risk balance, leaving the assessment broadly unchanged.
Key wording
But inflation pressures have broadened and intensified, with prices for many goods and services increasing strongly.
The new staff projections foresee annual inflation at 6.8% in 2022, before it is projected to decline to 3.5% in 2023 and 2.1% in 2024 – higher than in the March projections. This means that headline inflation at the end of the projection horizon is projected to be slightly above the Governing Council’s target.
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.
However, the conditions are in place for the economy to continue to grow on account of the ongoing reopening of the economy, a strong labour market, fiscal support and savings built up during the pandemic.
The Governing Council decided to end net asset purchases under its asset purchase programme (APP) as of 1 July 2022.
the Governing Council intends to raise the key ECB interest rates by 25 basis points at its July monetary policy meeting.
According to Eurostat’s flash estimate, inflation reached 9.1% in August.
inflation is now expected to average 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024.
The Governing Council today decided to raise the three key ECB interest rates by 75 basis points.
After a rebound in the first half of 2022, recent data point to a substantial slowdown in euro area economic growth, with the economy expected to stagnate later in the year and in the first quarter of 2023.
This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to the ECB’s 2% medium-term target.
Based on its current assessment, over the next several meetings the Governing Council expects to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations.
Official documents
Background reading
Related
9 June 2022 statement · 8 September 2022 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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