Fri, Feb 03, 2023 @ 17:59 GMT
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ECB accounts: Less frontloaded but steadier approach consistent with persistent inflation process

In the accounts of ECB’s December meeting, it’s noted that a “large number” of members “initially” expressed preference for a 75bps hike. But some of them expressed their willingness to agree on a 50bps if the majority were to support Chief Economist Philip Lane’s proposal.

That is, to rate interest rates by 50bps and to communicate that interest rates would “still have to rise significantly at a steady pace to reach levels that were sufficiently restrictive”. Meanwhile, 50bps hikes was “judged to constitute an appropriate pace”.

Also, “a less frontloaded but steadier approach to bringing interest rates to restrictive levels could be seen as consistent with the more persistent nature of the inflation process and continued elevated uncertainty…

Nevertheless, some member still held the view that “the proposed adjustment of the monetary policy stance was insufficient – even taking into account the combination of a 50 basis point interest rate hike with the announcement of a reduction in APP reinvestments.”

Full meeting accounts here.

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