European Central Bank Statement comparison — 27 October 2022 vs 15 December 2022
This European Central Bank statement comparison covers 27 October 2022 and 15 December 2022. Overall, the newer document was more hawkish. The December statement marks a decisive hawkish shift: rate path guidance is strengthened with explicit language on significant hikes, and balance sheet tightening is initiated. For the next decision, this signals the ECB remains firmly in tightening mode, with continued rate hikes and quantitative tightening on schedule.
What changed
More hawkish. The December statement marks a decisive hawkish shift: rate path guidance is strengthened with explicit language on significant hikes, and balance sheet tightening is initiated. For the next decision, this signals the ECB remains firmly in tightening mode, with continued rate hikes and quantitative tightening on schedule.
- Inflation — More hawkish. Both documents emphasize high and persistent inflation with broadening pressures; current document adds upward revision to projections, reinforcing hawkish stance.
- Labour Market — Little changed. No labour market passages in either document.
- Rate Path — More hawkish. Current guidance explicitly states rates must rise 'significantly at a steady pace' and links hiking to higher inflation outlook, a stronger commitment than prior's 'expects to raise further'.
- Balance Sheet — More hawkish. Current announces QT starting March 2023 with defined pace, a clear hawkish shift from prior's neutral reinvestment language.
Key wording
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.
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 50 basis points and, based on the substantial upward revision to the inflation outlook, expects to raise them further.
In particular, the Governing Council judges that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target.
Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations.
According to Eurostat’s flash estimate, inflation was 10.0% in November, slightly lower than the 10.6% recorded in October. The decline resulted mainly from lower energy price inflation. Food price inflation and underlying price pressures across the economy have strengthened and will persist for some time.
Amid exceptional uncertainty, Eurosystem staff have significantly revised up their inflation projections. They now see average inflation reaching 8.4% in 2022 before decreasing to 6.3% in 2023, with inflation expected to decline markedly over the course of the year.
The Governing Council’s future policy rate decisions will continue to be data-dependent and follow a meeting-by-meeting approach.
Official documents
Background reading
Related
27 October 2022 statement · 15 December 2022 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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