Interest rate meeting without cell phones: Does Lagarde distrust her ECB colleagues?

Interest meeting without cell phones
Does Lagarde distrust her ECB colleagues?

September 16, 2023, 8:03 p.m

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Already under her predecessor Mario Draghi, information from the circle of euro watchdogs was repeatedly leaked. In the run-up to this week’s interest rate meeting, President Christine Lagarde is said to have put a stop to this – and had all the cell phones of the members of the ECB Council collected.

According to insiders, ECB President Christine Lagarde had the monetary authorities’ cell phones collected at this week’s interest rate meeting to prevent important information from being leaked to the media. She also reprimanded the monetary authorities because important data had been revealed before the upcoming interest rate decision, said two people familiar with the matter.

Already under Lagarde’s predecessor Mario Draghi, information from the circle of euro watchdogs was repeatedly leaked. The ECB declined to comment. According to the insiders, members of the 26-member Governing Council were asked to hand over their cell phones on the first day of the interest rate meeting. The monetary authorities were also close to nominating Bundesbank Vice President Claudia Buch for the vacant top post at ECB banking supervision.

The cell phones were only returned after Buch’s nomination was made public by the Euro Central Bank. Five years ago, when current ECB banking supervisor Andrea Enria was nominated for the post, the news reached the media before the ECB had officially announced it. Lagarde took the measure after reports a day earlier that ECB staff had raised key inflation forecasts for the euro zone.

These quarterly economic and inflation forecasts from the central bank are considered an important factor in interest rate decisions. The majority of economists had previously assumed that the ECB would decide to pause interest rates at the meeting this time after nine increases in a row. Many economists changed their assessment after the news and relied on an increase – and they were right. According to the insiders, Lagarde criticized the leaking of this information at the beginning of the two-day interest rate meeting. There were also critical voices among fellow council members.