A large number of members of the European Central Bank's Governing Council were initially in favor of raising interest rates by 75 basis points (bps) at the December meeting, according to the minutes released on Thursday. They argued that inflation was much too high and warranted an increase "of the same size as in October to counter an unwarranted loosening of financial conditions and the monetary policy stance."
Eventually, a "broad majority of members" agreed to a 50 bps hike together with Chief Economist Philip Lane's proposal "to communicate that interest rates would still have to rise significantly at a steady pace to reach levels that were sufficiently restrictive to ensure a timely return of inflation to the ECB’s 2% medium-term target." Members saw the solution as "broadly equivalent to raising rates by 75 basis points at the present meeting," reasoning that a "less frontloaded" approach could be more consistent with the persistent nature of inflation.
