What changed in the European Central Bank statement — 10 September 2020

European Central Bank held policy at -0.50%. The current ECB statement shows no major stance shift; the key forward guidance on rates is unchanged, while balance sheet signals are expanded with additional details on APP and its link to rate hikes, reaffirming a highly accommodative posture. This signals that the ECB is comfortable with current policy settings and sees no urgency to adjust, keeping rates and PEPP purchases on hold until the inflation outlook imp

Decision

Decision: hold
Deposit facility rate: -0.50%

Going into the decision

On the day, the committee read as dovish — -2.1 on a scale where +3 means every member wants higher rates and −3 means every member wants cuts.

Reconstructed from official member remarks published before the decision date. 4 of 27 active members had stored official remarks.

What changed

The current ECB statement shows no major stance shift; the key forward guidance on rates is unchanged, while balance sheet signals are expanded with additional details on APP and its link to rate hikes, reaffirming a highly accommodative posture. This signals that the ECB is comfortable with current policy settings and sees no urgency to adjust, keeping rates and PEPP purchases on hold until the inflation outlook improves.

Inflation — Little changed. The prior document explicitly acknowledged a pandemic-related downward shift in inflation, while the current document reverts to a standard symmetric inflation commitment, removing the direct dovish nod.
Labour Market — Little changed. Labour market is not discussed in either document's key passages; no shift.
Rate Path — Little changed. The forward guidance on key ECB interest rates is repeated verbatim, maintaining the same conditional lower-for-longer stance with no material change.
Balance Sheet — More dovish. The current document introduces explicit details on APP purchases and links them to rate hike timing, reinforcing the accommodative stance beyond what was in the prior document's balance sheet-related signals.

Previous wording

The Governing Council will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,350 billion.
rate path: Full PEPP envelope maintained, signaling continued aggressive stimulus.

These purchases contribute to easing the overall monetary policy stance, thereby helping to offset the pandemic-related downward shift in the projected path of inflation.
inflation: Acknowledges pandemic has pushed inflation lower, justifying ongoing QE.

The purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions.
rate path: Flexibility allows the ECB to address fragmentation risks and adjust as needed.

The Governing Council will conduct net asset purchases under the PEPP until at least the end of June 2021 and, in any case, until it judges that the coronavirus crisis phase is over.
rate path: Longer-than-expected horizon (June 2021) with open-ended conditionality, highly accommodative.

The Governing Council will reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2022.
rate path: Reinvestment commitment extends well beyond purchase period, maintaining accommodation.

The Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.
rate path: Standard pledge; signals willingness to do more if needed, but no urgency.

Current wording

The Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.
inflation: Reaffirms symmetric inflation target, keeping optionality for further easing if needed.

The Governing Council will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,350 billion. These purchases contribute to easing the overall monetary policy stance, thereby helping to offset the downward impact of the pandemic on the projected path of inflation.
balance sheet: Reaffirms large-scale asset purchases to support inflation.

The purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions. This allows the Governing Council to effectively stave off risks to the smooth transmission of monetary policy.
balance sheet: Flexibility to address fragmentation and transmission risks, reassuring markets.

The Governing Council will conduct net asset purchases under the PEPP until at least the end of June 2021 and, in any case, until it judges that the coronavirus crisis phase is over.
balance sheet: Minimum duration but conditional on crisis, keeping open-ended support.

Net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year.
balance sheet: APP pace unchanged, temporary envelope continues as announced.

The Governing Council continues to expect monthly net asset purchases under the APP to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.
balance sheet: Links APP duration to rate hike timing, implying no rate hikes until inflation is strong.

Official statement

Monetary policy decisions

10 September 2020

At today’s meeting the Governing Council of the ECB took the following monetary policy decisions:

(1) The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively. The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.

(2) The Governing Council will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1,350 billion. These purchases contribute to easing the overall monetary policy stance, thereby helping to offset the downward impact of the pandemic on the projected path of inflation. The purchases will continue to be conducted in a flexible manner over time, across asset classes and among jurisdictions. This allows the Governing Council to effectively stave off risks to the smooth transmission of monetary policy. The Governing Council will conduct net asset purchases under the PEPP until at least the end of June 2021 and, in any case, until it judges that the coronavirus crisis phase is over. The Governing Council will reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2022. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.

(3) Net purchases under the asset purchase programme (APP) will continue at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year. The Governing Council continues to expect monthly net asset purchases under the APP to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates. The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

(4) The Governing Council will also continue to provide ample liquidity through its refinancing operations. In particular, the latest operation in the third series of targeted longer-term refinancing operations (TLTRO III) has registered a very high take-up of funds, supporting bank lending to firms and households.

The Governing Council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

Background reading

Cadence's comparison is generated from the official documents. Read the methodology.