Lagarde: All GC Members Rallied To 50bp Hike Consensus

The question and answer portion of the press conference begins - Q: What does the frontloading of rates mean for September? Is the TPI big enough and bold enough to contain rising Italian yields?

• A: GC members made two important decisions. The first was on rates and the second was on approving unanimously the TPI. We debated the pros and cons of sticking to the signalled 25bp hike in July, which entailed forward guidance for September – the two were clearly a package.
• On balance we decided it was appropriate to take a larger step to exiting negative rates. We did that on the basis of several indicators/elements which constitute a change from the June meeting. The realisation of the upside risks to inflation, plus flexible reinvestment under PEPP and unanimous support for the TPI led us to decide on a larger hike. All members rallied to the consensus of a 50bp move.
• The TPI will help us deliver on our mandate of price stability. All members of the euro area can be eligible (details released later). The GC in its discretionary/assessment will determine on the basis of indicators that signal unwarranted/disorderly dynamics whether it will activate the TPI.