European Central Bank (ECB) President Christine Lagarde speaks to the media after the Governing Council’s monetary policy meeting at the ECB’s headquarters in Frankfurt, Germany, on July 27, 2023. REUTERS/Kai Pfaffenbach/File Photo Obtaining licensing rights
FRANKFURT/Santiago de Compostela (Reuters) – European Central Bank President Christine Lagarde confiscated the mobile phones of fellow policymakers at a meeting this week and reprimanded them for leaking crucial information before a policy decision was made, two sources told Reuters.
This unprecedented move is the boldest step Lagarde has taken to stop information leaking from the board of directors, an issue that has plagued her presidency as well as that of her predecessor, Mario Draghi.
The 26 board members were asked to hand in their mobile phones on Wednesday, the first day of the meeting, as policymakers were about to select Claudia Buch as the European Central Bank’s top banking supervisor, the sources familiar with the matter said.
The sources added that the phones were returned after the announcement of Bush’s nomination to head the unified supervisory council, which supervises more than a hundred of the largest lenders in the euro zone.
The sources said the decision was made because the choice of current president Andrea Enria in 2018 appeared in the media before the official release.
A European Central Bank spokesman declined to comment.
Lagarde’s move came a day after Reuters exclusively revealed that the European Central Bank will raise key inflation forecasts this week, paving the way for an interest rate hike on Thursday.
Most economists and traders had expected the ECB to keep interest rates unchanged, but many changed their view after the Reuters report was published late on Tuesday.
Lagarde denounced the leak at the start of the two-day meeting, a criticism echoed by many of her colleagues.
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Lagarde inherited a divided board of governors from Draghi, who alienated so-called hawks in the northern eurozone with his ultra-loose monetary policy and arrogant management style.
She has steadily tried to create a more harmonious atmosphere and many sources agree that she has largely succeeded.
Ironically, its efforts have been aided by painfully high inflation rates over the past two years, which have narrowed the scope for opposition and effectively forced the European Central Bank to embark on a series of interest rate hikes.
But the sources said that as borrowing costs rose, more policymakers expressed reservations about further increases.
Lagarde said on Thursday that the latest increase had the support of a “large majority of Conservatives” compared to all of them in the previous increase in July and a “very broad consensus” a month ago.
Lagarde spared no effort in trying to attract her colleagues.
Weeks into her term in 2019, they gathered in a German mountain castle where she pledged to spend more time listening, and not make initial decisions before policymakers cast their votes, as Draghi has often been accused of doing.
In return, she asked state governors to stop wasting political decisions once they are made, keep internal conflicts out of the media and put away their phones while their colleagues talk.
She also set informal guidelines last year instructing colleagues to present the majority view to the public after ECB policy decisions, which are published on Thursdays, and to withhold “personal” views until the following Monday.
Writing by Francesco Canepa. Edited by Mike Harrison
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