this European Central Bank (ECB) It surprised him with an increase in interest rates by the end of July, which was twice what he expected at the June meeting to combat the 0.5 percentage point inflation spiral. But the decision was not without him internal reasoning. Although the measure was supported by “a large number of” participants, “some members” chose to abide by the decision of the board of directors. 0.25 point increase That the body itself had advanced a few weeks ago, as revealed by the release of meeting minutes this Thursday.
President of the Euro Central Bank, Christine LagardeHe hinted at this in his post-meeting appearance. highest walk multiple types two decades (Y first in 11 years) was accepted with “consensus”. So not unanimously. The publication of the minutes revealed the reasons for this split. “With risks recession lurkingAn increase of 25 basis points was seen to be more harmonious. gradual normalization monetary policy” collects the document on the minority position.
However, most advisers imposed the criterion that the ECB “had to show it was”. willing and able to respond“A higher-than-expected and persistent inflation in June. A 50 basis point increase,” they added. “gave more clarity” to the market. After a long discussion, the council members “expressed their determination. join the consensus“They’re collecting the minutes to raise the odds by half a point. unity message despite its contradictions.
rebalancing of forces
Behind this debate lies a timid change. balance of power On the governing council, only time will tell whether it is punctual or more structured. After coming to the Presidency mario draghi In 2011, directors advocated a flexible and broad interpretation of the ECB’s mandate that takes greater account of the economic situation.‘pigeons’) were in the majority against those who advocated sticking to the goal of achieving price stability (‘Hawks’). However, last July second thesis in terms of types.
what was consensusand a few weeks ago it seemed unlikely, Transmission Protection Tool (TPI abbreviated in English) is the exceptional borrowing mechanism of monetary policy, specifically designed to prevent uncontrolled increases in risk premiums. Italybut also for Spain, Greece and Portugal. The ‘Hawks’ had expressed their reluctance before the meeting, but in the end they supported it because they realized that the meeting was designed with ‘Hawks’. adequate security prevent governments neglecting public finances.
The minutes show that ECB advisors are more concerned about the persistence and expansion of inflation than an inflation one. possible recession“It has been argued that even a recession will not necessarily be lower. upside risks (of CPI)especially if it relates to a gas cut (from Russian to European) or some other supply ‘shock’ meaning a larger rise in inflation”. the euro’s fall against the dollarAs imports of energy raw materials are paid for in dollars, “a significant change in the environment that means greater inflationary pressures in the euro area”.