The European Central Bank must keep its policy options open beyond a crucial meeting in December as uncertainty over the likely evolution of inflation is extremely high, according to the accounts of the meeting.
The accounts show that the current hump in prices will be more durable than once thought, raising the risk that wages will start to adjust and keep price growth elevated.
The accounts showed on Thursday that the data available in December wouldn't resolve all the uncertainties surrounding the medium-term inflation outlook.
The Governing Council should keep enough optionality to allow for future monetary policy actions, including beyond its December meeting, the ECB said in its accounts.
The comments seem to echo calls made by conservative policymakers such as Jens Weidmann and Klaas Knot that the ECB should not commit to an extensive commitment beyond December as the inflation outlook could change quickly.
In December, the bank will contemplate ramping up other purchases to pick up the slack, as it is certain to agree on winding down a 1.85 trillion euro $2.08 trillion emergency bond-buying programme from March.
While most policymakers agree on the need for continued support, they differ on how much support may be needed as the inflation path was moving up, risks were elevated and projections would have to be raised.
The accounts showed that the longer the inflation spike lasted, the more it would become embedded in longer-term inflation expectations.
The majority appeared to be of the opinion that even if risks were skewed towards higher inflation, the ECB needed to be patient and not tighten prematurely, especially since wages were not showing significant acceleration.
Policy doves who want to push for bond buying in Dec. argue that inflation will come down on its own as one-off factors are the main culprit, while wage inflation remains anaemic.
The risk that inflation will settle above the ECB's target, a mark that Conservatives have undershot for the past decade is raised by the fact that even if temporary, high price growth will eventually push up wages.
Both sides agree that a rate hike next year would be premature and the differences are about the pace of continued stimulus in the form of debt purchases.
The ECB said that market participants were questioning the credibility of the Governing Council's forward guidance. In this context, it was stressed that the Governing Council had to reaffirm its determination to act forcefully and persistently.