European Central Bank policymakers are keen to end their bond purchase scheme at the earliest possible moment and raise interest rates as soon as July but certainly no later than September, nine sources familiar with ECB thinking told Reuters.
The ECB has been removing stimulus at the slowest possible pace this year but a surge in inflation is now putting pressure on policymakers to end their nearly decade-long experiment with unconventional support.
No policy proposals have been tabled yet and the ECB's next meeting is still over a month away, on June 9. Markets price in around 85 basis points of hikes for this year, so more than three 25 basis point moves, which would put the minus 0.5% deposit rate back in positive territory for the first time since 2014.
Interest rates can only rise, however, once bond purchases conclude and all 9 policymakers, who spoke on condition of anonymity, said this should happen on June 30 or July 1."Unless the outlook changes dramatically, I would go for July," a third source said. "Memory of that move still haunts us," a fourth source said. "Some people fear making a similar error."
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