European Central Bank board member Isabel Schnabel in a recent statement has expressed a difference of opinion, where she on Thursday rejected the views of colleagues who favor smaller interest rate hikes by the ECB, saying this could hinder efforts to lower inflation.
The ECB, determined to tackle the hike, has raised rates by 75 basis points at its last two meetings, but several central bank governors, including some who normally favor higher rates, have begun to consider smaller rate hikes.
However, Schnabel, the most influential voice in the hawkish camp, said this was an ineffective move. "Incoming data so far suggest that room to slow the pace of interest rate adjustments remains limited, even as we approach the 'neutral' rate estimate," he said at an event in London.
He argued that expectations for a smaller rate path could even be a reaction to the ECB, taking its actual policy stance further than what is needed to bring inflation back to the 2% target.
Earlier this week, Austria's Robert Holzmann was the most vocal at the ECB, advocating a 75 basis point hike, but the Netherlands' Klaas Knot and Germany's Joachim Nagel appeared open to a 50 basis point hike, as financial markets expected.
Speaking in Milan shortly before Schnabel, ECB vice president Luis de Guindos said the next step would depend on the data but said he did not expect eurozone inflation to rise further. It reached 10.6% in October.
Policymakers are adamant that rates should continue to rise but they don't fully agree on what rate is needed.
