Some ECB policymakers wanted rate hike pause: minutes
![The central bank in the 20-nation currency club has been aggressively hiking rates since last year as it seeks to bring runaway inflation under control The central bank in the 20-nation currency club has been aggressively hiking rates since last year as it seeks to bring runaway inflation under control](https://cdn.yen.com.gh/images/1120/45576bb22b54a6b5.jpeg?v=1)
Source: AFP
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Some European Central Bank policymakers wanted to pause hiking interest rates at their last meeting in March due to financial market turmoil, minutes published Thursday revealed.
The account highlighted growing differences among rate setters and, while another increase looks certain at the ECB's upcoming May meeting, it is unclear how big it will be, analysts said.
The central bank in the 20-nation currency club has been aggressively hiking rates since last year as it seeks to bring runaway inflation under control.
But the collapse of three US regional lenders and the UBS takeover of embattled rival Credit Suisse in March triggered market turmoil, and calls for central banks to pause their monetary tightening.
Despite this, a "very large majority" at the March ECB meeting agreed with raising borrowing costs by 50 basis points, an increase that had already been announced at the institution's February meeting, the minutes showed.
They believed it was important to stick to the previously flagged plan and "instil confidence and avoid creating further uncertainty in financial markets", they said.
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Inflation was still "far above" the ECB's two-percent target, the minutes noted.
However, "some members would have preferred not to increase the key rates until the financial market tensions had subsided," they showed.
"It was felt that the governing council's data-dependent approach would, in the current situation, suggest postponing the interest rate hike and waiting until uncertainty had declined," the minutes said.
The ECB has now raised interest rates by 350 basis points since July last year. Eurozone inflation has started slowing -- in March, it came in at 6.9 percent on an annual basis, down from 8.5 percent in February.
ING economist Carsten Brzeski said the minutes showed a growing debate over the impact of monetary policy, signalling a divide about the size of future hikes.
"At the current juncture, both a 25 basis point and a 50 basis point rate hike seem to be on the table" for the May 4 meeting, he said.
He said a "compromise" of downshifting to a quarter percentage point hike was likely -- but added a bigger increase could not be ruled out.
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Source: AFP