ECB’s Private Calls to Investors Revive Communications Confusion

News that European Central Bank chief economist Philip Lane has been speaking to banks and investors immediately after policy decisions risks renewing unease about the institution’s communications strategy days before a crucial stimulus decision.

Executive Board members’ diaries on the ECB website show Lane held 11 separate calls in the hours following a market-moving misstep by President Christine Lagarde in a March 12 press conference. The ECB announced its powerful pandemic bond-buying program six days later.

The calls were reported earlier by the Wall Street Journal.

An ECB spokesman said the decision to start regular briefings was taken in September 2019 and implemented in March 2020, to hear the views of economists and address any technical questions. They only touch on public information and their only focus is on the policy decision published beforehand, he said.

Still, the fact that major banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co., and asset managers including BlackRock Inc. were given exclusive rundowns is likely to irk those shut out.

“Obviously I am a bit jealous because he never called me,” said Antoine Bouvet, senior rates strategist at ING Groep NV. “I don’t know what the content of those calls was -- maybe that’s part of the problem -- but he may well have stuck to the script of his post-meeting blog updates.”

Some of those on the calls, which also included Axa SA, Deutsche Bank AG and Pacific Investment Management Co. among others, were more approving.

“A certain exchange of information between market participants and the central bank is desirable in my view,” said Florian Hense, an economist at Berenberg, which Lane called after the July 16 policy meeting. “Part of the reason is that an ECB which was freshly staffed in several positions, with Lane and Lagarde, has to -- or had to -- find itself.”

Special Briefings

The teleconferences with Lane, who joined the ECB in June 2019, started just as the coronavirus outbreak became a pandemic, and when investors were already questioning the coherence of the ECB’s communications strategy. They continued at least through September, the last month for which calendar records are available.

They also mark a departure from tighter rules of engagement introduced in 2015 after a board member gave a closed-door speech to financial-market participants at a dinner that revealed changes to its bond-buying program.

The diaries show Lane started speaking to financial professionals following Lagarde’s March 12 press conference, where she suggested the ECB wasn’t prepared to prop up Italy’s debt market -- a comment that caused stocks and bonds to slump.

He also published the first of his blog posts the next day explaining the policy decisions. Those posts became a further source of concern among investors when they occasionally appeared to contradict some of Lagarde’s messages.

Since then, Lagarde -- a former finance minister and International Monetary Fund head who started a year ago with no prior central-banking experience -- has become more comfortable in public briefings, and Lane has pared back his blogs.

The president was widely praised by economists and investors for her performance at last month’s press conference when she pledged more stimulus to help fight a new economic slump caused by the pandemic.

The decision on Dec. 10 could still be difficult to explain though, given the multitude of policy instruments the central bank now has at its disposal. It will likely be followed by a flurry of communication efforts by officials including Lane.

“It’s tricky isn’t it?” said Russell Silberston, investment strategist at Ninety One Plc. After the March meeting, “no doubt there was a communication misstep, so given the circumstances, perhaps he felt the personal touch was appropriate.”

©2020 Bloomberg L.P.

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