When Is a Private Chat With the ECB OK?
Banks that don’t have the pleasure of discussing the ECB’s outlook and monetary strategy with its chief economist will understandably feel aggrieved.
Widening the circle.
Source: Bloomberg
The European Central Bank has been caught in a controversy over the way it communicates with investors. Chief economist Philip Lane held a number of phone calls with selected ECB watchers soon after it announced policy decisions, as first reported by the Wall Street Journal on Tuesday.
This practice highlights a tension at the heart of modern central bank communications: If you seek to influence markets to improve the functioning of monetary policy, there’s a risk of appearing too close to investors — or at least some of them. The lesson for the ECB is that it must ensure there’s a level playing field among who gets access to information (and policy makers), to avoid any perception of bias. This may mean avoiding these calls altogether.