MNI BRIEF: ECB Account Shows Pre-Ukraine Crisis Hawkish Shift

European Central Bank Governing Council members at February’s monetary policy meeting were divided in their assessment of how to respond to a sharp uptick in euro area average inflation, the official account shows, amid growing hawkish unease over ultra-loose policy and uncertainty over second-round effects.

Some members argued that the forward guidance on the phasing out of asset purchases should be adjusted immediately. There also appears to have been broad-based dissatisfaction with ECB macroeconomic models which failed to predict the scale of increased price pressures in late 2021 and early 2022.

Sentiment may have shifted since the invasion of Ukraine, however, as MNI has reported.