Key facts
- Several ECB Governing Council members have indicated support for a June interest rate hike.
- Members cited persistent inflation and the need for monetary policy reaction.
- Some members believe a 25 basis point hike is likely or necessary.
- The ECB is committed to stabilizing inflation at 2% in the medium term.
- The decision will be based on incoming data and the duration of current shocks.
A compilation of statements from European Central Bank Governing Council members reveals a growing consensus towards an interest rate hike in June. Governors from Belgium, Lithuania, Greece, and board member Isabel Schnabel have explicitly stated their support or expectation for a rate increase, citing persistent inflation, the need to maintain credibility, and the unlikelihood of significantly better inflation news. Some, like Gediminas Šimkus, believe a 25 basis point hike is appropriate and that surprising markets by not acting would be detrimental. Others, such as Joachim Nagel, indicated that rate hikes are becoming increasingly probable if the inflation picture does not improve. ECB President Christine Lagarde stated that the decision will be data-dependent, considering the depth, duration, and repercussions of current crises, with the next six weeks being crucial for assessment. Frank Elderson noted a clear deterioration in energy prices, making it less likely the ECB can look past the shock. Álvaro Santos Pereira prefers acting earlier rather than later to avoid second-round effects, and Fabio Panetta suggested a recalibration of monetary policy is needed to counter persistent inflationary tensions. Martin Kocher noted that while a decision between holding or raising rates is possible, current indicators point towards a potential hike.