European Central Bank Statement comparison — 15 June 2023 vs 27 July 2023
This European Central Bank statement comparison covers 15 June 2023 and 27 July 2023. Overall, the newer document was more dovish. The ECB raised rates by 25bp for the second consecutive meeting, but the omission of balance sheet tightening and labour market concerns, alongside a softer inflation narrative, suggests a slightly less hawkish overall tone. The data-dependent guidance leaves the door open for a pause at the next meeting if incoming data confirms disinflation.
What changed
More dovish. The ECB raised rates by 25bp for the second consecutive meeting, but the omission of balance sheet tightening and labour market concerns, alongside a softer inflation narrative, suggests a slightly less hawkish overall tone. The data-dependent guidance leaves the door open for a pause at the next meeting if incoming data confirms disinflation.
- Inflation — Little changed. Both statements describe inflation as declining but still too high; the current removes explicit mention of underlying price pressures still strong, but the core message remains broadly unchanged.
- Labour Market — More dovish. Prior highlighted the robust labour market as a factor slowing disinflation; current omits any labour market discussion, indicating reduced concern.
- Rate Path — Little changed. Both meetings delivered a 25bp hike and maintained sufficiently restrictive forward guidance, but the current statement drops the explicit QT commitment, slightly reducing hawkishness.
- Balance Sheet — More dovish. Prior announced discontinuation of APP reinvestments (QT), while current makes no balance sheet mention, signalling a less aggressive tightening stance.
Key wording
Inflation has been coming down but is projected to remain too high for too long.
Indicators of underlying price pressures remain strong, although some show tentative signs of softening.
Staff have revised up their projections for inflation excluding energy and food, especially for this year and next year, owing to past upward surprises and the implications of the robust labour market for the speed of disinflation.
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’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.
The Governing Council confirms that it will discontinue the reinvestments under the asset purchase programme as of July 2023.
Inflation continues to decline but is still expected to remain too high for too long.
The past rate increases continue to be transmitted forcefully: financing conditions have tightened again and are increasingly dampening demand, which is an important factor in bringing inflation back to target.
The Governing Council’s future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to the 2% medium-term target.
Official documents
Background reading
Related
15 June 2023 statement · 27 July 2023 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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