Take a Peek on the ECB's 38th Floor as Philip Lane Awaits Role
(Bloomberg) -- Philip Lane can look forward to early starts, stunning sunsets, and a whole load of meetings in between when he replaces Peter Praet at the European Central Bank.
The Irish central bank governor was endorsed this week by euro-zone finance ministers as an Executive Board member. After more formalities, Lane, 49, will swap Dublin for Frankfurt in June for a term of eight years.
Mario Draghi will probably ask the Irishman, who has an economics doctorate from Harvard, to succeed Praet as chief economist, a crown first worn by Otmar Issing. That would put Lane at the vanguard of monetary policy. While the ECB president steals the limelight in presenting big decisions, it’s Praet who proposes action and helps design it.
What follows is an insider’s outline of the job, based on multiple conversations over the years with central bank officials past and present.
Welcome, Mr. Lane
The chief economist’s office is in the southwest corner of the 38th floor of the ECB’s headquarters in the east end of Frankfurt. When the fog clears, there’s a stunning view of the skyscrapers that define the city’s financial center.
Have a Coffee
If Lane’s day looks anything like Praet’s, he will arrive at the crack of dawn. By then, he can have already checked the latest market developments, and read the news and a bunch of research notes by economists at banks. Praet rarely leaves before 7 p.m.
Time for a Meeting
Tuesday mornings are key at the ECB, because that’s when the six-member Executive Board gathers for its weekly meeting. Lane will get documents to read over the weekend to prepare. After the session, lunch is served on the 40th floor. Much of the rest of the chief economist’s time is spent in meetings -- around a big conference table in his office, or elsewhere on the premises.
A key responsibility is briefing the whole Governing Council on the economy when the ECB’s decision-making body gathers to discuss monetary policy once every six weeks. The chief economist, working with the president, will propose any formal stance.
Lane will get help from more than 200 economists. Their work usually kicks into a higher gear 10 days before the Governing Council, on a Monday. For at least three hours starting at 9 a.m., staff will brief him on the latest economic data, financial conditions, and market expectations. In subsequent days, the focus of discussions turns to what the ECB’s policy should be.
Once a quarter, the ECB drums up new economic projections for the Governing Council. That outlook is prepared by the staff, who then present it at the so-called forecast steering committee. The chief economist attends with ECB Vice President Luis de Guindos and relevant managers.
On the Tuesday before the decision, the staff present analysis -- or forecasts, when they’re due -- to the Executive Board for discussion. Lunch is usually a bit later than usual.
Euro-zone governors fly in on Wednesday. They receive the same analysis that afternoon, right after Executive Board member Benoit Coeure has finished talking about markets, and just before dinner, which is the final chance for informal discussion.
When everyone returns on Thursday, the chief economist makes a policy proposal -- often a work in progress until shortly before it’s presented. He then ensures the council’s introductory statement is ready for Draghi to read out at his 2:30 p.m. press conference.
Miles and More
Praet’s job regularly takes him all round the continent and sometimes around the world. Last year, he gave almost as many speeches as Coeure, whom some call Draghi’s foreign minister. Next week he’s scheduled for four appearances in three different countries.
Such is the pace of the job that Lane might want to keep healthy by running to work if he can, as he is currently said to do. Issing used to swim every morning (except for Sundays and Mondays).
Every two or three weeks a group of about 20 ECB economists holds a “conceptual meeting” to present and discuss their research, and the chief economist often turns up. Lane, who has spent much of his life as an academic, might find it rather reminiscent.
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