Has ECB chief Christine Lagarde been gagged?

meAccording to insiders, ZB boss Christine Lagarde tried to stop management criticism after the interest rate decisions. With an informal guideline, currency regulators were urged to initially only reflect the majority opinion decided at the respective meeting in public appearances in the days following the interest rate decision. The Reuters news agency reports, citing four people with direct knowledge of the events.

You must retain your “personal view” on monetary policy decisions that are usually made Thursday through Monday. In the guidelines, which will not be formally voted on in the Governing Council, central bankers are also instructed not to leak any details of internal discussions to the press.

Critics see the new guidelines as a kind of muzzle that prevents currency watchdogs from expressing their point of view in the aftermath of interest rate decisions, which is also very important for the media. Therefore, they are obliged to explain or defend decisions that they do not fully support. Only then is a window of opportunity opened for criticism, even if they are no longer heard as much. This guideline is counterproductive, says one informant: “If you want something drilled, then do it that way.” Because if the critics couldn’t speak openly, they would look for other ways to be heard.

“Easier said than done”

The European Central Bank declined to comment on the report. Apparently, the new guidelines are not set in stone and are based more on Lagarde’s expectations. This also means that the monetary authorities have nothing to fear if the new comment is violated. However, the new unwritten rules have apparently had an effect: Lagarde told the news conference after the latest interest-rate meeting that the central bank’s billion-dollar bond purchases will most likely end in the third quarter and that an increase in interest rates will follow. some time later. After that, Bundesbank chief Joachim Nagel and his Belgian colleague Pierre Wunsch waited until this week to call for a faster pace in monetary policy normalization.

Lagarde’s move, which has now been made public by experts, is also surprising given that the ECB adopted a new communication strategy last year that did not contain corresponding requirements for public statements by central bankers. One of the experts sees the guardians of the currency in a real dilemma: it is important to represent the decisions as a unit, even if there are different opinions: “The problem is that this is easier said than done.”

Currency regulators in the mostly economically stronger northern euro zone countries have often criticized the central bank’s ultra-loose policy in recent years. With the foreseeable end of very loose monetary policy, they now have the upper hand, while the rather loose proponents, who often come from the south of the eurozone, are pushed onto the defensive.

In this context, the fact that Lagarde now apparently wants to keep internal criticism of monetary policy decisions secret is reminiscent of the last days in office of her predecessor Mario Draghi: in 2019, he had the wind in his sails as a representative of a line less relaxed with its tight grip on negative interest rates and massive bond purchases.


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