Economic Buzz: ECB Minutes Show Increased Hawkishness

8 Apr 2022 , 10:10 AM

Minutes of the latest rate-setting session showed that a large number of members held the view that the current high level of inflation and its persistence called for immediate further steps towards monetary policy normalization. The European Central Bank has turned more hawkish with several policymakers makers seeing the need for immediate steps towards policy normalization as euro area inflation set new highs on the back of soaring energy prices, the minutes, which the ECB calls account of the Governing Council session held on March 9-10 showed.

There were also concerns that the latest staff projections may be underestimating the persistence of above-target inflation. Eurozone inflation rocketed in March to set a new record of 7.5 percent as Russias invasion of Ukraine drove energy prices higher. Core inflation, which excludes prices of energy, food, alcohol and tobacco, accelerated to 3.0 percent.

Further, policymakers considered it essential to take action at the present meeting on scaling back the scheduled purchases under the asset purchase program, or APP, over the following quarters to unlock optionality for future decisions on policy rates.

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