ECB-September Minutes Highlight Inflation Concern


FRANKFURT, Oct 6 (Reuters) – Members of the Governing Council of the European Central Bank (ECB) expressed concern at their September meeting about the risk of inflation anchoring in the absence of a marked tightening of monetary policy, even at the cost of slower growth, shows the record of proceedings published on Thursday.

The ECB raised its main interest rates by three quarters of a point on September 8, the largest increase in its history, and said it planned further increases in the coming months to fight inflation.

While some Council members favored an increase limited to 50 basis points, a “very large” majority supported an increase of 75 points, the minutes said.

“Inflation was far too high and likely to remain above the Governing Council’s target for an extended period,” the document explained.

“The expected slowdown in economic activity would not be sufficient to reduce inflation significantly and would not on its own bring inflation back towards the target.”

Since the September meeting, inflation in the euro zone has accelerated further to reach 10%, a level not seen since the creation of the single currency, and several ECB officials have spoken publicly in favor of a another 75 basis point interest rate hike in the deposit rate, a tightening largely priced in by the markets.

The institution’s president, Christine Lagarde, for her part explained that the ECB would raise rates until they reach a “neutral” level, that is to say which neither promotes nor hinders growth. .

It has not quantified this neutral level but the majority of economists place it between 1.5% and 2%, which implies that the ECB could reach it as early as December.

The next monetary policy meeting of the Governing Council is scheduled for October 27. (Report Balazs Koranyi, French version Marc Angrand, edited by Sophie Louet)




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