ECB accounts: All agree to hold, yet open to further hike

ECB’s October meeting accounts reveal a consensus among “all members” to maintain the three key ECB interest rates unchanged. This decision reflects a shared confidence that current monetary stance was “sufficiently restrictive” for allowing the governing council to assess the “inflation outlook”, “dynamics of underlying inflation”, and “strength of monetary policy transmission”.

The minutes also noted a shift in market expectations, indicating that policy rates are anticipated to remain high for a longer period than previously predicted. Market expectations are transitioning from a “hump-shaped” interest rate path, typically recommended by macroeconomic models, to a “flatter” profile with a delayed first cut in the deposit facility rate.

A key point of discussion was the importance of avoiding an unwarranted loosening of financial conditions. In line with this, some members argued for “keeping the door open for a possible further rate hike”, emphasizing the commitment to data-dependence in its decision-making process.

In conclusion, ECB emphasized the need to remain “both persistent and vigilant.”

Full ECB meeting accounts here.