ECB Minutes: All members supported keeping the three key ECB rates unchanged

RATE STANCE: All members supported keeping the three key ECB interest rates unchanged. Members emphasised their collective determination to ensure inflation stabilised at the 2% target in the medium term. It was agreed that the current meeting’s decision to hold rates should not be seen as diminishing readiness to act if required. POLICY OUTLOOK: Members agreed the baseline, adverse and severe scenarios should all be published. It was agreed ECB staff would regularly update the scenario analysis with new information. Members reiterated future rate decisions would be based on the inflation outlook, underlying inflation and transmission strength. Many stressed there was too little evidence to reach firm judgements on the shock’s medium-term implications. Many saw the option value of waiting as high, given exceptional uncertainty and a broadly neutral stance. Many argued the meeting-by-meeting, data-dependent approach provided sufficient flexibility to react quickly if needed. Many stressed policy should remain focused on the medium term, not the first-round inflation spike. Many argued policy should look through a short-lived supply shock but respond forcefully if inflation risked staying away from target. Several said higher-frequency indicators on expectations, price-setting, demand, labour markets, supply chains and financial conditions would be crucial. Several argued scenario analysis would be essential for judging whether the baseline or a more adverse path was crystallising. Several stressed action should not be taken prematurely on adverse or severe scenarios without corroborating incoming data. Several argued the next meeting would provide more information on the conflict, energy prices, fiscal responses and early warning indicators. Some stressed the ECB should communicate calmly, clearly and without overreacting to rapidly changing news.