ECB minutes show majority support for 50bps hike despite market uncertainty

In ECB’s minutes of its March 15-16 meeting, it was revealed that “a very large majority” of members agreed with Chief Economist Philip Lane’s proposal to raise key interest rates by 50 basis points. This decision was made “in line with the intention the Governing Council had communicated at its last monetary policy meeting.”

The minutes noted that “following the announced intended interest rate path was seen as important to instil confidence and avoid creating further uncertainty in financial markets.” However, “some members would have preferred not to increase the key rates until the financial market tensions had subsided and to conduct a comprehensive re-evaluation of the stance at the Governing Council’s next monetary policy meeting, in May.”

Looking ahead, members concurred on the importance of a data-dependent approach for future policy rate decisions amid the “elevated level of uncertainty.” In this context, the minutes stated that “it was underlined that if the inflation outlook embedded in the March ECB staff projections were confirmed, the Governing Council would have further ground to cover in adjusting the monetary policy stance to ensure a timely return of inflation to target.”

Full ECB minutes here.