That’s according to a report from the June board meeting. There is broad consensus on a 25 basis point rate hike. “There was also an initial preference for a 50 basis point increase in key ECB interest rates given the risk of high inflation becoming even more persistent.”
Despite the fact that inflation has been declining for some time, concerns remain about the level of price increases. After all, people are still not entirely convinced that the current level of interest rates can suppress inflation effectively enough. This means an increase in the base interest rate to 4.5%.
Influence on banks
What happens next is still uncertain. Officials have recently struck a cautious tone, saying next steps depend on incoming data. Vice President Luis de Guindos said core inflation was showing signs of weakening, while chief economist Philip Lane stressed the impact of past increases across banks would gain momentum.