ECB’s account of its June meeting revealed a wide consensus in favor of a 25 bps rate hike. Interestingly, the minutes also noted an initial preference for an even steeper hike of 50 basis points.
“A preference was also initially expressed for raising the key ECB interest rates by 50 basis points in view of the risk of high inflation becoming more persistent,” the minutes noted.
However, the adopted “data-dependent, meeting-by-meeting approach” and uncertainties in the global economic landscape resulted in the final decision for a 25bps increment.
Meanwhile, the account noted, “Emphasis was put on the need to be sufficiently restrictive and persistent in the monetary policy tightening.”
It’s crucial, as per ECB’s narrative, to convey that their monetary policy still has a long way to go to bring inflation back to the target in a timely manner.
The meeting minutes convey this message clearly, stating, “It was seen as essential to communicate that monetary policy had still more ground to cover to bring inflation back to target in a timely manner.”
