European Central Bank Statement comparison — 16 March 2023 vs 15 June 2023
This European Central Bank statement comparison covers 16 March 2023 and 15 June 2023. Overall, the newer document was more hawkish. The June statement confirms a hawkish tilt: the ECB continued hiking, accelerated quantitative tightening, and strengthened forward guidance on keeping rates restrictive for longer. This signals the Council is committed to squeezing inflation out despite the smaller rate increment, reinforcing a no-easing bias for the near term.
What changed
More hawkish. The June statement confirms a hawkish tilt: the ECB continued hiking, accelerated quantitative tightening, and strengthened forward guidance on keeping rates restrictive for longer. This signals the Council is committed to squeezing inflation out despite the smaller rate increment, reinforcing a no-easing bias for the near term.
- Inflation — More dovish. Inflation assessment softened from 'too high for too long' to acknowledging it is 'coming down' and core showing 'tentative signs of softening', though still above target.
- Labour Market — More hawkish. New passage highlights robust labour market as a factor slowing disinflation, adding a hawkish dimension absent in prior.
- Rate Path — More hawkish. Forward guidance shifted from conditional data-dependence to explicit commitment to sufficiently restrictive rates and prolonged hold, while the 25bp hike, though smaller, is paired with QT acceleration.
- Balance Sheet — More hawkish. Prior document lacked explicit balance sheet action; current announces discontinuation of APP reinvestments, a hawkish tightening of liquidity.
Key wording
Inflation is projected to remain too high for too long.
Therefore, the Governing Council today decided to increase the three key ECB interest rates by 50 basis points
The elevated level of uncertainty reinforces the importance of a data-dependent approach to the Governing Council’s policy rate decisions, which will be determined by its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission.
The Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area.
In any case, the ECB’s policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy.
ECB staff now see inflation averaging 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.
Inflation has been coming down but is projected to remain too high for too long.
It therefore today decided to raise the three key ECB interest rates by 25 basis points.
The Governing Council’s future decisions will ensure that the key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and will be kept at those levels for as long as necessary.
Tighter financing conditions are a key reason why inflation is projected to decline further towards target, as they are expected to increasingly dampen demand.
The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
Indicators of underlying price pressures remain strong, although some show tentative signs of softening.
Official documents
Background reading
Related
16 March 2023 statement · 15 June 2023 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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