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WASHINGTON, April 13 (Reuters) – European Central Bank policymakers are converging on a 25-point interest rate hike in May, although other options remain on the table and the debate remains unresolved, according to five sources with direct knowledge of the discussion.

The ECB has raised rates by at least 50 basis points at each of its six consecutive meetings — the fastest pace on record — to combat high inflation. But several factors support the case for extra caution, the sources, who spoke on condition of anonymity, told Reuters.

Uncertainty remains high after last month’s volatility in the financial sector and the failure of past rate hikes to work through the economy, so there is less need to hold on to past moves, he said.

He added that the price peak is now in sight and this “last mile” is safe to travel in small steps. Another gradualist argument is that the ECB’s deposit rate, now 3%, is at a growth-limiting level.

The sources said the debate was still open and the outlook could still change – especially with April inflation and the ECB’s quarterly bank lending survey both two days away from the May 4 meeting.

An ECB spokesman declined to comment.

Some of the sources said the ECB would prefer not to give any guidance on what it will do in June, just as it is keeping its options open now, so that policymakers have a free hand on the new economic forecast at the time.

The sources said some favor no change in May – mostly southern European policymakers who did not support a 50 basis point hike last month, while others – a smaller group – argue for another 50 basis point increase.

So far, only policymakers have publicly commented on what the ECB’s next move might be.

Dutchman Klaas Knott said it was not clear if 50 basis points were needed or if 25 would be enough. Slovakia’s Peter Kazimir said the ECB would likely slow the pace of hikes, while Austria’s Robert Hollmann backed another 50 basis point move.

Markets currently sell off in increments of 25 basis points each in May and June, with a third increment sold off in full in September.

The sources explained that the increase in inflation is needed as overall inflation is very high and core inflation – from fluctuating food and energy prices – is likely to rise for consecutive months.

Francois Villeroy de Galhau, head of the French central bank, made a similar point on Wednesday: “Changes in underlying inflation” should be the trigger for the ECB to cut interest rates.

The sources added that concerns over a wage increase remain because labor markets are tight and could create significant demand for workers who have lost large amounts of income over the past two years.

Last month’s banking turmoil had a modest impact on the euro zone, so the economy continues to operate on the baseline outlined in the ECB’s March projections, which are expected to see further rate hikes in the market.

Reporting by Balazs Koranyi; Edited by Mark John and Bernadette Baugh

Our standards: The Thomson Reuters Trust Principles.

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