European Central Bank Statement comparison — 15 June 2023 vs 14 September 2023
This European Central Bank statement comparison covers 15 June 2023 and 14 September 2023. Overall, the newer document was more dovish. The ECB hiked 25bp but signaled that rates may have reached their peak, while growth projections were significantly downgraded. The overall shift is a nuanced dovish tilt: still tightening but with a clearer peak and no further balance sheet reduction, pointing to a hold at the next meeting.
What changed
More dovish. The ECB hiked 25bp but signaled that rates may have reached their peak, while growth projections were significantly downgraded. The overall shift is a nuanced dovish tilt: still tightening but with a clearer peak and no further balance sheet reduction, pointing to a hold at the next meeting.
- Inflation — More hawkish. Inflation forecasts revised up for near term and underlying pressures remain high, with no softening language carried over from prior.
- Labour Market — More dovish. Labour market not mentioned in current statement, indicating reduced concern relative to prior hawkish characterization.
- Rate Path — More dovish. Hike delivered but forward guidance signals rates may have peaked and growth downgrade introduces a dovish trade-off.
- Balance Sheet — More dovish. QT not mentioned in current statement, withdrawing the prior hawkish balance sheet signal.
Key wording
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.
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.
Inflation continues to decline but is still expected to remain too high for too long.
the Governing Council today decided to raise the three key ECB interest rates by 25 basis points.
The September ECB staff macroeconomic projections for the euro area see average inflation at 5.6% in 2023, 3.2% in 2024 and 2.1% in 2025. This is an upward revision for 2023 and 2024 and a downward revision for 2025.
With the increasing impact of this tightening on domestic demand and the weakening international trade environment, ECB staff have lowered their economic growth projections significantly.
Based on its current assessment, the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.
Official documents
Background reading
Related
15 June 2023 statement · 14 September 2023 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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