In the accounts of ECB’s July 20-21 meeting, it’s noted that “a very large number of members” agreed that it was appropriate to hike interest rates by 50bps. The 50bps hike was seen as “warranted in view of the worsening of the inflation outlook since the Governing Council’s June meeting”.
“Some members” argued in favor of a 25bps hike as that was the “intended move communicated” at the June meeting. Also, “with recession risks looming25bps hike was seen as more in line with a “gradual monetary policy normalization.” It’s also warned that deviation from earlier guidance would “add to the prevailing market uncertainties”. But some also argued that a 50bps hike provided more clarity for market participants.
It’s also emphasized that the 50bps hike “did not constitute an upward shift in the interest rate path but rather a frontloading of the policy normalisation.” As for September meeting, there was broad support to move to a “meeting-by-meeting approach” to interest rates.
