European Central Bank Statement comparison — 9 June 2022 vs 27 October 2022
This European Central Bank statement comparison covers 9 June 2022 and 27 October 2022. Overall, the newer document was more hawkish. The ECB delivered a larger 75bp hike and maintained hawkish inflation rhetoric while slightly softening forward guidance to a meeting-by-meeting approach. This signals aggressive tightening with flexibility, leaving the door open for either a step-down or further acceleration depending on incoming data.
What changed
More hawkish. The ECB delivered a larger 75bp hike and maintained hawkish inflation rhetoric while slightly softening forward guidance to a meeting-by-meeting approach. This signals aggressive tightening with flexibility, leaving the door open for either a step-down or further acceleration depending on incoming data.
- Inflation — More hawkish. Rhetoric escalated from expecting inflation to decline to 2.1% in 2024 to stating it will stay above target for an extended period, reinforcing urgency.
- Labour Market — Little changed. Labour market not addressed in current statement; prior mention of strength is absent but no directional change.
- Rate Path — More hawkish. Delivered a 75bp hike (vs 25bp planned prior) and maintains expectations of further hikes, though forward guidance shifts to meeting-by-meeting, reducing pre-commitment.
- Balance Sheet — More hawkish. Balance sheet stance tightened further via TLTRO recalibration, while APP reinvestments continue, maintaining overall tightening bias.
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.
Inflation remains far too high and will stay above the target for an extended period.
In recent months, soaring energy and food prices, supply bottlenecks and the post-pandemic recovery in demand have led to a broadening of price pressures and an increase in inflation.
The Governing Council’s monetary policy is aimed at reducing support for demand and guarding against the risk of a persistent upward shift in inflation expectations.
The Governing Council today decided to raise the three key ECB interest rates by 75 basis points.
The Governing Council took today’s decision, and expects to raise interest rates further, to ensure the timely return of inflation to its 2% medium-term inflation target.
The Governing Council will base the future policy rate path on the evolving outlook for inflation and the economy, following its meeting-by-meeting approach.
Official documents
Background reading
Related
9 June 2022 statement · 27 October 2022 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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