Technical Analysis

ECB December policy meeting account: Broad majority supported 50 bps rate hike

  • The ECB releases the account of its December 2022 monetary policy meeting
Justin Low

Justin Low

Thursday, 19/01/2023 | 12:35 GMT-0

19/01/2023 | 12:35 GMT-0

  • A large number of policymakers initially expressed preference to raise rates by 75 bps
  • Some argued that a less than 75 bps move would send a wrong message and risked being perceived as inconsistent in trying to bring inflation back down to 2% target
  • A broad majority of policymakers supported proposal to raise rates by 50 bps
  • A compromise was in some ways seen as broadly equivalent to raising by 75 bps
  • The steadiness of rate hikes and period over which rates remained in restrictive territory mattered more
  • Risks to inflation outlook remains primarily on the upside
  • Full account

That’s certainly interesting as the minutes reveal quite a hawkish undertone among members at the ECB. If anything else, I would say the “compromise” here is that they would instead choose to hike for a longer period by 50 bps – something that Lagarde was adamant in defending here. This justifies further the euro’s resilience on the day, in my view.

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