The Governing Council of the European Central Bank was split at its March meeting over the pace of ending debt buybacks, with some officials keen to open the door to a third-quarter rate hike, according to minutes released Thursday. .
Many officials believed that the current high level of inflation and its durable nature called for immediate measures, explains the document reporting the exchanges between central bankers of the euro zone held at the beginning of March.
Taking a further step towards the normalization of its accommodating policy, the ECB then accelerated the pace of the gradual withdrawal of its debt purchases, citing their probable cessation in the third quarter. But this should not automatically and quickly lead to a rise in its key rates, she said.
However, some members of the Board of Governors had expressed a preference for setting a fixed date this summer for the end of the APP program of debt purchases, which would pave the way for a rise in interest rates in the third quarter in view of the deterioration inflation outlook.
For these officials in favor of a more determined tightening of credit conditions, the ECB runs the risk of acting too late against inflation.
On the other hand, some Council members advocated a more cautious approach to the risk of a recession linked to the war in Ukraine.
These different options underline the divisions between on the one hand the hawks, in favor of a rapid monetary tightening, and the doves, in favor of a more flexible policy.
The discussions promise to be heated again between the supporters of these two lines, who will meet again for the next Board of Governors on April 13 and 14.
Discover the best free bank cards thanks our comparison
The March decision was clearly a compromise, believes Carsten Brzeski, an economist at ING, but in general the ECB leans more on the side of the hawks.
The board of governors is divided in particular on the duration of the growth of inflation, considers his side Frederic Ducrozet, analyst at Pictet. But the hawks have the advantage.
In particular, officials cast doubt on the forecast of a price increase of only 1.9% in 2024, as announced by the ECB. The euro zone is currently suffering from an inflation shock, with a record price increase of 7.5% in March over one year.
The Board of Governors, on the other hand, was unanimous on the need for additional fiscal measures by politicians at national and European level to mitigate the impact of the war in Ukraine and the sanctions.