ECB Tone Meter Weekly Update: Slight Dovish Turn in the Week of 1-5 December

5 December 2025

By Marta Vilar – MADRID (Econostream) – The ECB Tone Meter moved slightly dovish this week, with the Governing Council reading at -0.12, which we classify as broadly neutral but still with a marginal dovish tilt, and the Executive Board at +0.05, which we view as neutral with a very marginal hawkish lean.

This compares with last week’s readings of –0.9 for the Governing Council and +0.20 for the Executive Board. Early in the week, communication generally pointed to a firmer hold stance, but this shifted in the second half after ECB Executive Board member Piero Cipollone ended his period of silence with more dovish comments.

Biggest Movers of the Week: Lagarde and Cipollone

Much of the week’s movement in the index can be traced to two Executive Board members, whose re-emergence after a period of silence—and their considerable weight in the index—had a pronounced impact.

ECB President Christine Lagarde, who had not made any directional monetary policy remarks since the Governing Council meeting in Florence, returned to the fore with comments that closely mirrored her tone from October 30, showing virtually no change.

Speaking before the European Parliament’s Committee on Economic and Monetary Affairs in Brussels, Lagarde said that risks remained two-sided and had “narrowed”, and that uncertainty had “abated”, the same points she made during the October press conference, indicating that her neutral-but-marginally-hawkish tone persisted.

Cipollone, however, pushed the index in the opposite direction. He also reappeared after a prolonged silence—longer than Lagarde’s—not having commented on monetary policy since late September, when he expressed confidence in the economy and a balanced view on inflation risks.

While he repeated his “more balanced” outlook on the baseline scenario and again described the economy as resilient, this week he outlined the conditions that, in his view, should prompt ECB action, implying that any such move would most likely be downward.

Asked whether it was premature to signal the end of rate cuts, he warned that “many risks are still in the pipeline,” pointing to the potential impact of tariffs on the economy and the redirection of Chinese goods to Europe.

“The financial boost coming from higher expenditure, especially in Germany, might not manifest itself with the intensity that we are expecting,” he said. “For the recovery of consumption, we are assuming that the savings rate will go down, but this assumption has yet to be tested. If it doesn’t materialise, we will need to act.”

Dominant Theme’s in the Week’s Communication: Signs the Balance Still Tilts Toward a Cut

A recurring idea in this week’s remarks was that, if the ECB were eventually to adjust policy again, policymakers still tend to see a cut as more likely than a hike—not necessarily soon, but as the more probable direction should circumstances change. This was evident not only in Cipollone’s comments.

Latvijas Banka Governor Mārtiņš Kazāks also hinted at this when he told Econostream that a negative shock would make a cut more likely, whereas an equally strong positive shock would not make a hike equally likely—while emphasising that this did not imply the next move would be a cut.

Another major theme this week was the discussion around inflation deviations.

Bundesbank President Joachim Nagel noted that the next projection round, which will include the first look at 2028, would help the ECB assess “whether we are still on track to meet our medium-term inflation target.”

Austrian National Bank Governor Martin Kocher went a step further, arguing that “slight deviations above or below the 2% target should not trigger action,” and cautioning against “monetary policy micromanagement.”

ECB Chief Economist Philip Lane offered the most detailed contribution, delivering an extensive speech that laid the theoretical foundations for how the ECB should think about inflation deviations. He indicated openness to tolerating an energy-driven miss such as that expected from ETS 2, while warning against ignoring a persistent projected undershoot.