The accounts of ECB’s September 7-8 monetary policy meeting showed that a “very large number” of committee members expressed a preference for a 75bps hike, which was “a proportionate response” to upward revisions to inflation outlook and an important signal of the determination to bring inflation back to target in a “timely manner”.
But “some members” preferred a 50bps hike as that would be “large enough to signal determination in proceeding with the interest rate normalization”. With the “looming risk of a recession”, a 50bps hike as part of a “sustained path towards more neutral rate levels” might prove “sufficient” to return inflation to target. “What needed to be addressed was the risk of the sharp rise in inflation, exacerbated by the war, destabilizing inflation expectations,” the account noted.
But add the end, all members joined a consensus for the 75bps hike, while maintain that policy should “not follow a pre-set path”, and be set on a “meeting-by-meeting basis.
