European Central Bank Statement comparison — 14 September 2023 vs 26 October 2023
This European Central Bank statement comparison covers 14 September 2023 and 26 October 2023. Overall, the newer document was mixed. The ECB paused its hiking cycle but delivered a hawkish hold, replacing the prior's hike-and-peak posture with an explicit commitment to maintain restrictive rates. This signals that despite acknowledging some disinflation progress, the Council remains vigilant and will not cut rates in the near term.
What changed
Mixed. The ECB paused its hiking cycle but delivered a hawkish hold, replacing the prior's hike-and-peak posture with an explicit commitment to maintain restrictive rates. This signals that despite acknowledging some disinflation progress, the Council remains vigilant and will not cut rates in the near term.
- Inflation — More dovish. Current document acknowledges inflation dropping markedly and underlying easing, softening the prior's unambiguously hawkish inflation rhetoric.
- Labour Market — Little changed. No labour market passages in either document; no shift.
- Rate Path — More hawkish. Prior rate hike with peak-signalling forward guidance replaced by a pause with explicitly hawkish forward guidance committing to keep rates restrictive for long.
- Balance Sheet — Little changed. No balance sheet passages in either document; no shift.
Key wording
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.
Underlying price pressures remain high, even though most indicators have started to ease.
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.
Inflation is still expected to stay too high for too long, and domestic price pressures remain strong.
The Governing Council today decided to keep the three key ECB interest rates unchanged.
inflation dropped markedly in September, including due to strong base effects, and most measures of underlying inflation have continued to ease.
The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission.
Based on its current assessment, the Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal.
Official documents
Background reading
Related
14 September 2023 statement · 26 October 2023 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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