(Bloomberg) -- European Central Bank policy makers may slow down interest-rate hiking with only a 50 basis-point increase next month, according to people with knowledge of the matter.

Initial discussions suggest a lack of momentum for another 75 basis-point move at present, the people said, declining to be identified because Governing Council deliberations are private. Barring another surprise surge in inflation, the consensus might well favor the less aggressive step, they said.

Among reasons cited are mounting recession risks, the possibility that consumer-price pressures will weaken, and the prospect that a half-point move in the deposit rate to 2% will reach close to a so-called neutral level that no longer stimulates the economy. The need to bargain over a start to balance-sheet reduction was also cited.

An ECB spokesman declined to comment.

With four weeks to go before the ECB’s final decision of the year on Dec. 15, officials still have plenty of time to make up their minds. Against a backdrop of market expectations for a half-point hike, hawkish policy makers haven’t tried much to counter that view by insisting on a third consecutive increase of 75 basis points.

What Bloomberg Economics Says...

“The Governing Council’s reticence to deliver another 75bp hike likely reflects a shift in the balance of risks. The economy is cooling fast and headline inflation will likely peak around the turn of the year. Our view is that a 50bp hike is likely in December, we also see borrowing costs topping out lower than markets expect.”

--Jamie Rush, chief European economist. For more from BE, click here

Austrian central-bank Governor Robert Holzmann -- previously a cheerleader for aggression -- hasn’t talked much about the size of the next increase, and neither has German Bundesbank President Joachim Nagel. 

Their Estonian and Latvian colleagues, in a region suffering the euro zone’s most rampant inflation, have both cited 50 and 75 basis points as possibilities without yet expressing a preference.

Bank of France chief Francois Villeroy de Galhau predicted on Wednesday that the ECB will probably hike to a “normalization range” of around 2% next month, remarks that might also point to 50 basis points.

The next inflation reading due Nov. 30 will be “relevant” for the December decision, both as an indicator of price pressures and as a number to feed into quarterly forecasts, ECB Vice President Luis de Guindos suggested to Bloomberg Television. He declined to express a view on the size of the next move.

The Governing Council’s most recent discussions were scheduled for Nov. 9. Weaker-than-expected US inflation data published the next day may have encouraged ECB officials, and some Federal Reserve counterparts have said it may now be time to moderate their own rate hiking.

Even so, at 10.6% in the euro region -- according to new data released on Thursday -- inflation remains at a record in the history of the single currency. Guindos warned that it will stay “elevated” through the first half of 2023. Meanwhile price growth in the UK was a faster-than-expected 11.1% in October.

The next Governing Council meeting will coincide with the publication of the November inflation reading on Nov. 30. A week later policy makers begin a quiet period before their December decision. 

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