FRANKFURT (Reuters) - European Central Bank President Christine Lagarde offered fellow policymakers back-to-back interest rate hikes worth 50 basis points each to secure a majority for Thursday's policy decision, four sources told Reuters.
The ECB eased the pace of its interest rate hikes on Thursday but stressed significant tightening remained ahead and laid out plans to drain cash from the financial system as part of a dogged fight against runaway inflation.
The sources said this was the result of a difficult compromise after Philip Lane's proposal to raise rates by half a percentage point on Thursday met with significant opposition from policymakers insisting on a 75-basis-point increase.
The stalemate ended when Lagarde offered to signal more 50-basis-point rises and a hawkish message on inflation during her press conference, convincing enough policymakers to back the proposal.
Two of the sources said this could even mean three back-to-back 50-basis-point moves if the inflation outlook failed to improve, though there was no explicit commitment to such a policy path.
The compromise helped her secure a majority for the decision although 8-10 policymakers out of 25 remained sceptical - an unusually high proportion.
About half a dozen of the dissenters held out even after the compromise while others said they could live with a 50 basis point move on Thursday as long as Lagarde coupled it with a hawkish message in her news conference.
An ECB spokesman declined to comment.
The debate on whittling down the ECB's bond portfolio proved easier as policymakers discussed reducing those holdings by 15 or 20 billion euros per month starting in March or April before settling for the former option in both cases.
At a press conference after the decision, Lagarde said that, based on current data, she anticipated another 50 basis-point rise at the ECB's next meeting on Feb 2 "and possibly at the one after that, and possibly thereafter".
This clashed with the ECB's promise to take decisions "meeting-by-meeting" and depending on the data.