ECB faces call to end private meetings after Lane leak By Reuters
By Francesco Canepa
FRANKFURT (Reuters) – The European Central Bank is facing a call to stop the practice of holding closed-door meetings with the private sector after ECB Chief Economist Philip Lane reportedly disclosed an unpublished inflation forecast at one such event.
On Thursday, the Financial Times reported that Lane revealed to German economists in a private meeting that the ECB expected to achieve its 2% inflation target by 2025. This information was not available to the public and could have been used to draw inferences regarding the future trajectory of interest rates.
Partly, the ECB, which is the central bank of the 19 euro-zone countries, disputed the newspaper’s reporting.
Sven Giegold (a prominent member the European Parliament) told Reuters he would ask Christine Lagarde in a letter that these meetings should be stopped.
Giegold stated to Reuters that the ECB must stop the exclusive meetings it holds with the private sector. It isn’t transparent what the participants said.
Giegold’s comments were not confirmed by an ECB spokesperson.
After the FT report’s publication, Eurozone government bond yields increased and the euro recovered. However, the partial denial did not stop the movement. [GVD/EUR]
According to the FT, Lane told the audience that the ECB had published a “medium-term scenario” which showed that inflation would rebound to 2% soon after its 3-year forecast period.
The details of this report were disputed by the ECB, who called them inaccurate. The FT also stated that the ECB could raise eurozone interest rates in 2023.
An ECB spokesperson wrote that Lane had not said to analysts, “Mr Lane” in a written statement on Friday.
The spokesperson declined to comment on the question of 2025.
Financial Times declined to comment on a request by the paper.
Giegold (Greens coordinator for the European Parliament committee overseeing the ECB) said that the confusion was a sign the ECB’s communication strategy “had failed miserably”.
German politician Giegold stated, “You don’t know whether you believe the newspaper and the ECB’s public message.”
The ECB needs to change their strategy as this approach is a failure.
He suggested the ECB publish audio recordings or end these meetings completely to prevent confusion.
Last week the ECB revised its economic forecasts. It also decreased its pace for pandemic emergency bonds purchases. The central bank now expects inflation to be 2.2% in 2018, 1.7% next year, and 1.5% by 2023.
It has committed not to increase rates until inflation reaches 2% before the end its forecast period, typically two or three years. The money market has priced in the possibility of a rate increase three years hence.
Lane had to cancel one-on-one meeting with investors earlier this year due to criticisms of policy meetings. However, he continues to meet with groups of economists.
At the time ECB President Lagarde defended https://www.ecb.europa.eu/pub/pdf/other/ecb.mepletter210122_Eppink~b42eabd54b.en.pdf “exchanging views with representatives of the private sector − including financial market participants” because they help transmit the central bank’s policy to the economy.
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