ecb minutes may show discord as draghi exits
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Expect a new name under the main chair after this month
Expect a new name under the main chair after this month's press conference. (Photo: Harry Daniels)

- Account could include more on disputes over QE

- Other measures may have also proven contentious

- Minutes due Thursday at 11.30 GMT


Frankfurt, 8 October 2019, (LS NEWS) – The minutes from the European Central Bank Governing Council meeting last month are expected to offer more information about the disharmony among rate-setters but little insight into the next steps for Eurozone monetary policy, according to analysts.


Last month the council decided to cut the deposit rate, restart quantitative easing, and tier the interest rates on bank deposits as part of a broad monetary stimulus package designed to boost both economic growth and flagging inflation.


Sabine Lautenschlaeger, a hawk on the bank’s executive board, was reportedly opposed to the resumption of quantitative easing and resigned in the days following the meeting.


Since the announcement of the package, other council members have expressed their dismay with decision.


When asked about what he expects from the account, Oliver Rakau, chief German economist at Oxford Economics, said: “Hopefully some idea about how much opposition there really was.”


Rakau said he would like the minutes to provide “an idea of how fractious the council has become.”


He said opposition to the restart of quantitative easing came from French council members, Lautenschlager, and Bundesbank President Jens Weidmann, a perennial hawk.


“It would be interesting to see how much [opposition] there was to other parts of the package.” Specifically, he cited the cut in the deposit rate and tiering for bank deposits.


TD Securities said, “What matters for markets will be how willing the ECB seems to deliver further stimulus in the future; we think emphasis will be on standing ready to act.”


Rakau said he doesn’t expect much of a forward-looking aspect in the account of the meeting, noting that the ECB, like many central banks, is reacting to the shifting uncertainties in the global economy.


A new regime


Dekabank Strategist Karsten Luedemann said coming changes in the makeup of the governing council will reduce the significance of the edited play-by-play from the September meeting.


“We are moving into a new regime with the new president,” Luedemann said.


Ireland’s Philip Lane joined the executive board in June as the ECB’s chief economist, and three more spots on the six-person panel will be filled by new policymakers in the days ahead.


Former IMF chief Christine Lagarde is due to succeed ECB President Mario Draghi on 1 November, and along with Lautenschlaeger, the bank will need to replace France’s Benoit Cœuré, whose term ends in December. The centrist was reportedly opposed to the resumption of QE due to the timing.


Cœuré’s spot is expected to go to an Italian with the departure of Draghi, who’s from Italy, and the entrée of Lagarde, who hails from France, to maintain the unspoken balance at the top of the ECB. The executive board generally includes a member from the three largest Eurozone economies, Germany, France, and Italy. Germany is likely to fill Lautenschaeger’s post.


Luedemann noted that at the last meeting, Draghi said there was no need to vote, suggesting that while the naysayers may have been vocal, they were also in the minority.  


-- Eric Culp

Twiter: @EricCulpLS

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