European Central Bank policymakers are still leaning towards a half-percentage-point rate hike on Thursday, despite turmoil in the banking sector, as they expect inflation will remain too high in coming years, a source told Reuters.
The source added that formal proposals for the meeting had not yet been distributed but policymakers had seen the new quarterly projections.
Still, dovish policymakers who have been preaching greater caution in raising borrowing costs and warning about the risk of financial instability felt vindicated by the recent market turbulence, the source said. The ECB can push through decisions with a simple majority though President Lagarde has been known to seek the broadest possible consensus.
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