Lagarde seized ECB colleagues’ handsets to prevent leaks, say sources

European Central Bank president Christine Lagarde seized the mobile phones of her fellow policymakers at this week’s meeting and rebuked them for leaking crucial information in advance of a policy decision, two sources have told Reuters.

The unprecedented move is the boldest step that Ms Lagarde has taken to stop information being leaked from the governing council, an issue that has plagued her presidency as well that of her predecessor, Mario Draghi.

The 26 members of the governing council were told to hand over their mobile phones on Wednesday, the first day of the meeting, as policymakers were about to pick Claudia Buch as the ECB’s top banking supervisor, sources familiar with the matter said.

The handsets were returned after the announcement of Ms Buch’s nomination as chair of the Single Supervisory Board, which oversees more than a hundred of the euro zone’s biggest lenders, the sources said.

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The decision was made because the choice in 2018 of the current chair, Andrea Enria, appeared in the media before the official release, the sources said.

An ECB spokesperson declined to comment.

Ms Lagarde’s move came a day after Reuters revealed the ECB would raise a key inflation forecast this week, which paved 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 the Reuters report was published late on Tuesday.

Ms Lagarde stigmatised the leak at the start of the two-day meeting, a criticism that was echoed by several colleagues.

Ms Lagarde inherited a divided governing council from Mr Draghi, who had alienated so-called hawks in the euro zone’s north with his ultra-easy monetary policy and abrasive management style.

She has steadily tried to create a more harmonious atmosphere and several sources agree she has largely succeeded.

Ironically, her efforts were helped by painfully high inflation over the past two years, which reduced the room for dissent and effectively forced the ECB to embark on a streak of interest rate hikes.

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

Ms Lagarde said on Thursday the latest increase was backed by “a solid majority of the governors”, compared with all of them for the previous rise in July and a “very, very broad consensus” a month earlier.

(c) Copyright Thomson Reuters 2023