ECB Meeting Accounts: Members widely expressed concerns over high inflation

The accounts of the European Central Bank's most recent policy meeting, released on Thursday, said that members widely expressed concerns over high inflation numbers, reported Reuters. Some members viewed it as important to act without undue delay in order to demonstrate the bank's determination to achieve price stability. 

Many of the upside risks to the inflation outlook that the governing council had already discussed last summer had now materialised, the minutes added, noting that members broadly agreed with the assessment of the current economic situation. The incoming data suggested that the war would slow the recovery, but not derail it. 

Additional Takeaways (as summarised by Reuters):

• The argument was made that flexibility should be a permanent feature of the governing council’s toolbox. 
• There were a number of factors that would make inflation more persistent than projected at present. 
• The reference to rate hikes beginning "some time" after the conclusion of QE does not prevent a timely rate rise if conditions warrant it.
• Members pointed out that it was hard to imagine sustained higher inflation without an increase in wage pressures.
• ECB Chief Economist Philip Lane's proposal was seen as consistent with the possibility of deciding to end net asset purchases already at the end of the second quarter or early in the third quarter.
• It was recalled that the expected path of the nominal key ECB interest rates would approach a neutral level only at a very late stage of the policy normalisation process.
• Even relatively small steps might be sufficient to turn the current accommodative monetary policy stance into a restrictive stance.