It was stated that the European Central Bank did not reach unanimity on the interest rate decision.
The European Central Bank (ECB), which once again increased interest rates by 75 basis points on Thursday, shows a difference of opinion on the rate of interest rate increase and balance sheet reduction.
According to sources familiar with the matter, speaking to Bloomberg, ECB members did not receive a 75 basis point hike unanimously. In comparison, three members voted favor of a 50 basis point hike.
Members also discussed not signaling for future rate hikes.
Sources from Bloomberg stated that some ECB members discussed including an assessment aimed at “advancing towards neutral interest rate” in the text. At the same time, concerns were expressed that this view could be “misunderstood as a slowdown in interest rate hikes.”
While it was stated in the ECB resolution text that interest rate hikes would continue in the upcoming meetings, no signal was given about the size of the increases.
According to sources speaking to Bloomberg, the ECB does not plan to announce the start date of the balance sheet contraction in December.
European Central Bank President Christine Lagarde said that economic activity slowed significantly in the third quarter and is likely to slow further in the fourth quarter and the first quarter of 2023.
“We expect further weakening for the rest of this year and the beginning of next year,” Lagarde said at a press conference after the ECB announced its interest rate decision.
Lagarde said the economic growth outlook risks are “clearly to the downside.” Referring to the Ukraine war, Lagarde predicted that supply-side woes could worsen.