Lagarde seizes ECB colleagues’ handsets

Move comes to prevent leaks after Reuters revealed bank would raise inflation forecast

FRANKFURT/ SANTIAGO DE COMPOSTELA:

European Central Bank (ECB) President Christine Lagarde seized the mobile phones of her fellow policymakers at this week’s meeting and rebuked them for leaking crucial information ahead of a policy decision, two sources told Reuters.

The unprecedented move is the boldest step that Lagarde has taken to stop information leaking out from the Governing Council, an issue that has plagued her presidency as well as that of her predecessor, Mario Draghi.

The 26 members of the Governing Council were told to hand over their mobile phones on Wednesday, the first day of the meeting, as policymakers were about to pick Claudia Buch as the ECB’s top banking supervisor, the sources familiar with the matter said.

The handsets were returned after Buch’s nomination as chair of the Single Supervisory Board, which oversees more than a hundred of the euro zone’s biggest lenders, had been announced, the sources added.

The decision was taken because the choice in 2018 of the current chair, Andrea Enria, appeared in the media before the official release, the sources said. An ECB spokesperson declined to comment.

Lagarde’s move came a day after Reuters exclusively revealed the ECB would raise a key inflation forecast this week, which paved the way for an interest rate hike on Thursday. Most economists and traders had expected the ECB to keep rates on hold, but many changed their view after the Reuters report was published late on Tuesday.

Lagarde stigmatised the leak at the start of the two-day meeting, a criticism that was echoed by several colleagues.

Lagarde inherited a divided Governing Council from Draghi, who had alienated so called hawks in the euro zone’s north with his ultra-easy monetary policy and abrasive management style.

She has steadily tried to create a more harmonious atmosphere and several sources agree she has largely succeeded.

Published in The Express Tribune, September 17^th, 2023.

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