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Lagarde seized the cellphones of ECB colleagues to prevent leaks

European Central Bank (ECB) President Christine Lagarde speaks to the media following the Governing Council’s monetary policy meeting at the ECB headquarters in Frankfurt, Germany, on July 27, 2023. REUTERS/Kai Pfaffenbach/File Photo Get license rights

  • Phones of policymakers taken before Buchin’s appointment
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FRANKFURT/SANTIAGO DE COMPOSTELA, Sept 15 (Reuters) – European Central Bank President Christine Lagarde seized the mobile phones of her fellow policymakers at a meeting this week and reprimanded them for leaking sensitive information ahead of a policy decision, two sources told Reuters.

The unprecedented move was a bold move by Lagarde to prevent leaks from the governing body, an issue that plagued her presidency and that of her predecessor, Mario Draghi.

All 26 members of the governing body were told to hand over their mobile phones on Wednesday, the first day of the meeting, as policymakers set to choose Claudia Buch as the ECB’s top bank supervisor, sources familiar with the matter said.

The handsets were withdrawn after Mr Puch was nominated to head the single supervisory board overseeing the eurozone’s more than a hundred biggest lenders, the sources added.

Sources said the decision was made as current president Andrea Enria appeared in the media before the 2018 election was officially announced.

An ECB spokesman declined to comment.

Lagarde’s move came a day after Reuters exclusively revealed the ECB would raise a key inflation forecast this week, paving the way for an interest rate hike on Thursday.

Most economists and traders had expected the ECB to keep rates on hold, but many changed their view after a Reuters report was published late on Tuesday.

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Lagarde slammed the leak at the start of the two-day meeting, a criticism echoed by several colleagues.

Divided

Lagarde inherits a divided governing body from Draghi, who has alienated so-called hawks in the eurozone’s north with his ultra-easy monetary policy and abrasive management style.

He continued to try to create a more conciliatory atmosphere and many sources agree that he was largely successful.

Ironically, his efforts have been aided by painfully high inflation over the past two years, which has reduced room for dissent and forced the ECB to pursue interest rate hikes.

But as borrowing costs pushed higher, more policymakers expressed reservations about further hikes, the sources said.

He said Thursday that the latest increase was supported by a “solid majority of governors,” compared with a previous hike in July and a “very broad consensus” a month earlier.

Lagarde spared no effort to impress her colleagues.

Weeks into his 2019 term, they gathered at a German mountain fortress where he promised to ask for more time and not make leading decisions before policymakers weighed in, as Draghi has often been accused of.

In response, he asked governors to stop trashing policy decisions they once made, keep internal disputes out of the media and put their phones away when colleagues are speaking.

He also set informal guidelines last year instructing colleagues to give the public a majority view after the ECB’s policy decisions, which are released on Thursdays, and hold off on “personal” views until the following Monday.

By Francesco Caneba; Editing by Mike Harrison

Our Standards: Thomson Reuters Trust Principles.

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