European Central Bank Statement comparison — 25 January 2024 vs 11 April 2024
This European Central Bank statement comparison covers 25 January 2024 and 11 April 2024. Overall, the newer document was mixed. The ECB has pivoted from a firmly hawkish hold posture to one that openly conditions future cuts on confidence in disinflation. While inflation concerns remain elevated, the addition of a cut condition signals that the next move is likely a cut if data cooperate.
What changed
Mixed. The ECB has pivoted from a firmly hawkish hold posture to one that openly conditions future cuts on confidence in disinflation. While inflation concerns remain elevated, the addition of a cut condition signals that the next move is likely a cut if data cooperate.
- Inflation — More hawkish. The current statement emphasizes persistent domestic and services inflation, a more hawkish tone than the prior focus on declining underlying inflation and demand dampening.
- Labour Market — Little changed. Labour market is newly mentioned as wage growth moderates and firms absorb costs; the introduction is neutral.
- Rate Path — More dovish. The current statement adds an explicit condition for a rate cut ('if confidence increases'), a dovish addition to the prior firm hold posture.
- Balance Sheet — Little changed. The prior's explicit QT timeline is absent, but no new balance sheet signal is given; neutral.
Key wording
Aside from an energy-related upward base effect on headline inflation, the declining trend in underlying inflation has continued, and the past interest rate increases keep being transmitted forcefully into financing conditions.
Tight financing conditions are dampening demand, and this is helping to push down inflation.
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.
The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary.
The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
Over the second half of the year, it intends to reduce the PEPP portfolio by €7.5 billion per month on average. The Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
But domestic price pressures are strong and are keeping services price inflation high.
The Governing Council’s future decisions will ensure that its policy rates will stay sufficiently restrictive for as long as necessary.
If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction.
The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction, and it is not pre-committing to a particular rate path.
most measures of underlying inflation are easing, wage growth is gradually moderating, and firms are absorbing part of the rise in labour costs in their profits.
Official documents
Background reading
Related
25 January 2024 statement · 11 April 2024 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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