Lagarde Demands ECB Dissenters Keep Quiet As Central Bank Prepares For Liftoff

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by Tyler Durden
Sunday, Apr 24, 2022 - 12:45 PM

As members of the ECB's rate-setting committee prepares for the arduous process of normalizing monetary policy for the first time in nearly a decade (something they have hinted will begin later this year), ECB chief and monetary policy novice Christine Lagarde has apparently become so worried about dissenters undermining the ECB (and making her look bad) that she has instituted a new policy barring all talk about the central bank falling behind the curve from members of the executive board.

And in keeping with this policy, Lagarde has reportedly asked her fellow executive board members to hold back on sharing any dissenting views with the press, according to a Reuters report.

Unsurprisingly, this policy has rubbed some of Lagarde's fellow board members the wrong way, and now they're complaining to the press under the cover of anonymity.

So much for 'building a consensus'. Instead, policymakers say the policy incentivizes them to share their true thoughts with the press under the shadow of anonymity - otherwise known as a 'leak'.

Here's more from Reuters:

"Do you want leaks? Because this is how you get them," one of the sources, who asked not to be named, said. "If people can't speak openly, they'll still talk but using different channels."

The move also surprised many as the ECB devised a new communication strategy just last year after an 18 month review and such restrictions were not debated then.

Dissenters also wonder why Lagarde didn't impose this change 18 months ago during the official review of the central bank's communications strategy, which was finalized 18 months ago.

To be sure, supporters of Lagarde and the new policy say it's critical for the central bank to present a united front, particularly during periods of transition.

Supporters of Lagarde's request say that criticism delivered soon after meetings weakens the decision and sows doubt, so a few extra days simply allows the public to understand and accept the outcome.

"Once we take a decision, we should stand with it, even if some of us had different views," another source said. "The problem is that it's easy to say but next to impossible to implement."

But there was probably a more diplomatic option instead of telling dissenters to kindly keep their mouths shut. And like this first leak portends, there will likely be a flurry of additional anonymously sourced complaints about the ECB falling behind the curve, which in turn could unleash more uncertainty both for ECB monetary policy, and financial markets.