European Central Bank members will debate whether to raise interest rates by 25 or 50 basis points at Thursday’s meeting to tackle record inflation, sources told Reuters.
The same sources stressed that the Bank’s members hope for an agreement to help indebted countries such as Italy in the bond market, if they adhere to the Commission’s rules on reforms and fiscal discipline.
These include targets set by the Commission to secure money from the EU’s recovery and resilience fund as well as the Stability and Growth Pact when it is reinstated next year after the pandemic, the sources said.
The ECB had said it would raise interest rates only gradually and likely by 25 basis points in July, postponing a bigger move until September.
However, ECB chief Christine Lagarde said in a speech in June that “there are clearly circumstances in which gradual action would not be appropriate.”
Members of the rate-setting committee have been debating for weeks the conditions countries must meet for the new bond-buying program, aimed at curbing borrowing costs when it is deemed out of step with economic reality, the sources said.
Some policymakers would like to involve the European Stability Mechanism, the eurozone bailout fund created in the wake of the debt crisis a decade ago, but that option is likely to be rejected.
Source: Capital
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