©Reuters. FILE PHOTO: Christine Lagarde, President of the European Central Bank (ECB), speaks to the media after the monetary policy meeting of the Governing Council at the ECB headquarters in Frankfurt, Germany, July 27, 2023. REUTERS/Kai Pfaffenbach/File Photo
By Balazs Koranyi and Francesco Canepa
FRANKFURT/SANTIAGO DE COMPOSTELA (Reuters) – European Central Bank President Christine Lagarde seized the mobile phones of her fellow policymakers at this week’s meeting and chided them for leaking crucial information ahead of a policy decision , two sources told Reuters.
The unprecedented step is the boldest step Lagarde has taken to prevent information leakage from the Board of Directors, an issue that has plagued both her presidency and 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 appoint Claudia Buch as the ECB’s top banking supervisor, sources said. are familiar with the matter.
The phones were returned after Buch’s appointment as chairman of the Single Supervisory Board, which oversees more than 100 of the euro zone’s largest lenders, was announced, the sources said.
The decision was made because the choice of the current chairman, Andrea Enria, appeared in the media before the official publication in 2018, the sources said.
An ECB spokesperson declined to comment.
Lagarde’s move came a day after Reuters exclusively revealed that the ECB would raise a key inflation forecast this week, paving the way for a rate hike on Thursday.
Most economists and traders had expected the ECB to leave rates unchanged, but many changed their views after the Reuters report was published late on Tuesday.
Lagarde stigmatized the leak at the start of the two-day meeting, a criticism echoed by several colleagues.
Lagarde inherited a divided board of directors from Draghi, who had alienated the so-called hawks in the north of the eurozone with his ultra-easy monetary policy and aggressive management style.
She has steadily tried to create a more harmonious atmosphere and several sources agree that this has largely been successful.
Ironically, her efforts were aided by the painfully high inflation of the past two years, which reduced the space for dissent and effectively forced the ECB into a series of rate hikes.
But as borrowing costs rose, more policymakers expressed reservations about further increases, the sources said.
Lagarde said Thursday that the latest increase was supported by “a solid majority of governors,” compared with all of them for the previous increase in July and a “very, very broad consensus” a month earlier.
Lagarde has spared no effort to woo her colleagues.
Weeks into her term in 2019, they gathered in a German mountain castle where she promised to spend more time listening, and not make decisions in advance before policymakers had their say, as Draghi was often accused of.
In return, she asked governors to stop throwing out policy decisions once made, keep internal disputes out of the media and put away their phones while colleagues were speaking.
Last year, she also issued informal guidelines instructing colleagues to present the majority position to the public after the ECB’s policy decisions, which are published on Thursdays, and to postpone “personal” positions until the following Monday.
(Writing by Francesco Canepa; Editing by Mike Harrison)