The European Central Bank will raise interest rates for the seventh meeting in a row on Thursday as its long fight against stubborn inflation continues, with only the size of the move still open to debate.
The central bank for the 20-country euro zone has already lifted rates by a record 350 basis points since July in the hope of stopping runaway price growth. But getting inflation back to its 2% target is still years away, leaving policymakers with no choice but to tighten policy again this month and beyond.
Conservative "hawks", who hold a comfortable majority in the Governing Council, are leaning towards a bigger increase.they could compromise on a smaller move as long as the ECB indicates that May is not the end of its hikes, even if some peers - notably the U.S. Federal Reserve - may be reaching their own interest rate peaks.Another issue will be just how big a majority ECB President Christine Lagarde wants backing the decision.
Supporting the case for a smaller move, the euro zone economy barely grew last quarter and lending figures showed the biggest drop in credit demand in over a decade, suggesting past rate hikes are starting to work their way through the economy. Hawks argue that underlying price growth remains far too high and suggests that inflation could level off above the ECB's target unless the bank acts more aggressively.
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