ECB President Christine Large began a post-meeting press conference at 1:45 pm BST. ECB decided to slow down the pace of rate hikes and go with a 25 basis point rate increase today, pushing ECB rates to the highest level since late-2008. Statement no longer made promise of future rate hikes but said that future moves will ensure that policy stance is sufficiently restrictive. ECB noted that reinvestments under APP, its largest QE programme by volume, will end by July 2023.
Here are key takeaways from the press conference.
Opening remarks
- Inflation outlook remains too high for too long
- Data-dependant approach to future decision will continue
- Incoming data supports medium-term outlook from previous meetings
- Previous decision will have lagged impact on the economy
- Futures decision will ensure policy is sufficiently restrictive to bring inflation down to goal
- APP reinvestments will slow and will be discontinued starting from July 2023
- Governments should roll back support measures orderly manner to avoid need for additional policy action
- Domestic demand and consumption remained weak
- Manufacturing outlook worsens
- Household incomes benefit from tight labour market
- Pent-up demand support services
- Energy and supply bottlenecks continue to drive inflation
- Wage pressure continued to strengthen
- Private domestic demand is expected to stay weak
- Euro-area banking sector proved to be resilient
- Recent surveys suggest that bank lending may continue to decline
Q&A session
- Everybody on Governing Council agreed rising rates was needed
- Decision was almost unanimous
- It is clear ECB is not pausing
- Some belived 50 bp rate hike would be appropiate, nobody suggested leaving rates unchanged
- We lack quantitative estimate of what is 'sufficiently restrictive' policy level
- Ultimate objective is to reduce APP bond holdings to zero
- It will take 12-15 years to bring APP holdings to zero
- European banking system outperformed that of the United States
- Data-dependency is not forward guidance
- ECB is not Fed-dependent - ECB can continue to tighten policy even if Fed pauses
- Not making commitments to cut rates at any point in time
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