Frankfurt (AFP) - European Central Bank policymakers disagreed last month on how to respond to runaway inflation and economic uncertainty caused by the Ukraine war, minutes from their meeting showed on Thursday.
The revelation comes as markets are looking for signs that the ECB could soon announce the first interest rate hike in over a decade.
"A large number of members held the view that the current high level of inflation and its persistence called for immediate further steps towards monetary policy normalisation," the minutes read.
The ECB's governing council played it safe at the March meeting, agreeing to wind down monthly bond purchases at an accelerated pace in the second quarter, while keeping the end date of the stimulus scheme flexible.
An interest rate hike would follow "some time" after the end of the bond-buying scheme, it said.
But the minutes revealed that some governors wanted to go further to combat inflation, as the war in Ukraine further pushes up prices for energy, food and raw materials.
"Among those calling for action at the present meeting, some members preferred to set a firm end date for (bond) purchases during the summer," the text read.
"This could clear the way for a possible rate rise in the third quarter of this year in the light of the deterioration in the inflation outlook."
Other members meanwhile preferred a "wait-and-see approach" given the "exceptionally high uncertainty" created by Russia's invasion of Ukraine and Western sanctions against Moscow.
The minutes show that the ECB "has become more hawkish", said ING bank economist Carsten Brzeski, using a term describing those advocating for a tightening of monetary conditions.
'Doubts'
The ECB has for years maintained an ultra-loose monetary policy, pushing interest rates to record lows and hoovering up billions of euros in bonds each months to keep credit flowing in the eurozone.
Like other central banks, it now faces the challenge of scaling back stimulus to stem inflation without hurting economic growth, a task made more complicated by the return of war to Europe.
ECB president Christine Lagarde warned last week that a prolonged Ukraine conflict would keep energy prices and the cost of living spiralling, blighting a post-Covid recovery.
Eurozone inflation jumped to a record high of 7.5 percent in March, well past the ECB's two-percent target.
The ECB expects inflation to come down to 1.9 percent by 2024 once the energy shock wears off, although the minutes reflected "doubts" about the forecast.
The US Federal Reserve last month announced its first interest rate rise since 2018, with further hikes expected.
