ECB Facing a Big Push for 75 Basis-Point Rate Boost

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(Bloomberg) — More than a third of the European Central Bank’s policymakers favored a 75 basis-point interest-rate hike on Thursday, according to people with knowledge of the matter.

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The Governing council voted to approve the 50 basis point move by Philip Lane, Chief Economical Officer. This was anticipated by analysts, investors, and after a discussion on the merits a larger increase that led to a compromise on overall decision, according to the people. They declined anonymity because such confidential discussions are confidential.

Hawkish policymakers relented in their wish for a bigger increase because they prioritized the messaging on future moves and a firm agreement to promptly start reducing the ECB’s balance sheet, the people said.

A spokesperson for the central bank declined to comment on the Governing Council’s deliberations.

German yields on two-year bonds rose 25 basis points to 2.38% after the report.

This decision has slowed rate hikes while maintaining a strong anti inflation rhetoric. It included pledges from President Christine Lagarde to increase rates by half a point in 2023. She stated that there was broad support for this strategy.

“Some might have wanted to do a bit more, some might have wanted to do a bit less, but eventually we coalesced with a very broad majority around the decision that you have in front of you,” she said.

The president emphasized that the decision doesn’t herald a further slowdown in hiking.

“Anybody who thinks that this is a pivot for the ECB is wrong,” she told reporters after the meeting. “We have more ground to cover, we have longer to go and we are in for a long game.”

Greg Ritchie provided assistance.

(In fifth paragraph, adds market reaction)

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