European Central Bank Statement comparison — 8 September 2022 vs 27 October 2022
This European Central Bank statement comparison covers 8 September 2022 and 27 October 2022. Overall, the newer document was more hawkish. The ECB statement shows a clear hawkish escalation: inflation language is more urgent, labour market concerns are dropped, and additional tightening via TLTRO adjustment is introduced. This signals that the Governing Council will continue raising rates aggressively at upcoming meetings, likely with another 75bp hike in December.
What changed
More hawkish. The ECB statement shows a clear hawkish escalation: inflation language is more urgent, labour market concerns are dropped, and additional tightening via TLTRO adjustment is introduced. This signals that the Governing Council will continue raising rates aggressively at upcoming meetings, likely with another 75bp hike in December.
- Inflation — More hawkish. The current document intensifies the tone by describing inflation as 'far too high' and set to stay above target for an 'extended period,' compared to the prior's projection-based assessment.
- Labour Market — More hawkish. The prior document flagged a 'substantial slowdown' and stagflation risk, but the current document omits any labour market or growth concern, shifting focus entirely to inflation.
- Rate Path — More hawkish. Both documents deliver a 75bp hike and expect further raises, but the current adds TLTRO recalibration and a risk balance passage explicitly guarding against persistent inflation expectations, reinforcing the hawkish stance.
- Balance Sheet — Little changed. The current document introduces reinvestment commitments for APP and PEPP, which are neutral in direction; no equivalent passage exists in the prior document.
Key wording
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.
The Governing Council’s future policy rate decisions will continue to be data-dependent and follow a meeting-by-meeting approach.
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.
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.
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.
The Governing Council 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 started raising the key ECB interest rates and, in any case, for as long as necessary to maintain ample liquidity conditions and an appropriate monetary policy stance.
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.
Official documents
Background reading
Related
8 September 2022 statement · 27 October 2022 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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