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ECB hawks pushed for dialling back stimulus at Thursday meeting

ECB hawks pushed for dialling back stimulus at Thursday meeting
ECB hawks pushed for dialling back stimulus at Thursday meeting   -   Copyright  Thomson Reuters 2022
By Reuters

FRANKFURT – A seizable minority of European Central Bank policymakers wanted to dial back the ECB’s monetary stimulus already at Thursday’s meeting and a decision in March now looks likely, barring a big drop in inflation, two sources told Reuters.

The sources said that winding down the ECB’s bond purchases faster was the first port of call for policymakers. They are now scheduled to run at least until October.

An ECB spokesperson declined to comment.

The ECB finally acknowledged mounting inflation risks on Thursday and even cracked the door open to an interest rate increase this year, marking a remarkable policy turnaround for one of the world’s most dovish central banks.

But as the ECB has pledged not to raise rates while it is still buying bonds, policymakers need to speed up the pace at which they taper their Asset Purchase Programme first.

The sources added the ECB’s “mechanical” projections for inflation, which incorporate economic data since the last meeting and the market price for oil among other things, were already above the official forecasts it published in December.

The decision in March will depend on actual and expected inflation as well on any sign that wages were rising faster.