On Thursday (November 23) local time, the European Central Bank released the minutes of its meeting from October 25th to 26th. Decision makers unanimously believe that if necessary, they should raise interest rates again.
At last month's interest rate meeting, the European Central Bank held interest rates unchanged, marking the first time in more than a year that it has suspended interest rate hikes. Since the start of the interest rate hike process in July last year, the European Central Bank has raised interest rates by a total of 450 basis points, with the main refinancing rate, marginal lending rate, and deposit mechanism rate raised to 4.50%, 4.75%, and 4.00%, respectively.
The minutes of the meeting stated: "Even if interest rates remain unchanged at this meeting, people still believe that the management committee should be prepared on the basis of continuous evaluation and further raise interest rates if necessary, even if this is not part of the current benchmark scenario
The minutes of the meeting showed that participants pointed out that the management committee must persevere and remain vigilant. Perseverance is the key to reducing inflation to 2% in the medium term. And vigilance means that although the management committee must assert the effectiveness of its measures and acknowledge the progress made, given that inflation may face new challenges before returning to target levels, overconfidence and complacency must be avoided.
ECB officials believe that overall, the process of anti inflation seems to be proceeding largely as expected, reflecting not only the weakening impact of external factors that previously drove up inflation, but also the impact of monetary policy.
The meeting minutes stated that although economic growth was weaker than expected, partly due to the concretization of downside risks, overall inflation has developed as expected.
The final data released by the Eurostat last week showed that the year-on-year growth rate of CPI in the eurozone in October significantly decreased to 2.9%, the lowest level in two years.
The meeting minutes show that most participants believe that they have taken sufficient measures to curb inflation in the coming years. However, some policymakers point out that inflation remains high, and long-term inflation forecasts seem to be still higher than the European Central Bank's target.
When it comes to evaluating the transmission of monetary policy, decision-makers generally believe that the intensity of transmission is greater than expected in September. They emphasized that a significant portion of the interest rate transmission has not yet been completed and may suppress economic activity and inflation during the forecast period.