ECB’s Rebel Voice Bows Out With Plea for Greater Transparency
(Bloomberg) — The European Central Bank’s most rebellious interest rate-setter has one last suggestion before he departs this month: more transparency on policy decisions.
Arch hawk Robert Holzmann, who’s been comfortable delivering a lone ‘no’ vote on occasions during the ECB’s monetary-easing push, wants outsiders to glean more of an understanding of officials’ thinking as they calibrate borrowing costs.
He’d like to see a version of the Federal Reserve’s dot plot, under which policymakers anonymously provide their projections for rates. Alternatively, views diverging from the narrative presented by President Christine Lagarde could be summarized and released.
“When we start out, unanimity is a strong signal,” Holzmann said in an interview before he cedes control of Austrian’s central bank to former Economy Minister Martin Kocher. “But if the situation is not as clear in what direction you need to move because there are arguments in all directions, then I think deviations have information for the market.”
The parting advice caps a six-year stint for Holzmann at the ECB, where the 76-year-old was among the staunchest supporters of the unprecedented ramp-up in rates unleashed to tame the euro zone’s sharpest-ever spike in prices.
With inflation returning toward the 2% target, Holzmann didn’t back a June reduction that brought borrowing costs to the same level. He’s also questioned other moves during the cutting campaign.
But while Lagarde singled him out at a press conference this year for failing to fall in line with the rest of the 26-member Governing Council, Holzmann says he’s never had any conflict with the ECB chief and speaks highly of her work.
His plea to boost transparency came at a farewell dinner last month in Frankfurt, when asked by Lagarde for his thoughts on how the ECB could operate more effectively. The idea will probably remain just that, however, as a yearlong strategy review wrapped up only recently.
“Some people have fewer problems with being dissenters than others,” Holzmann said. “But then there have been elements where I thought deviation starts to be needed.”
Some in Vienna saw such defiance as a reputational risk for Austria — a country known for decades of consensual multi-party government that often keeps political intrigue and haggling behind closed doors.
Any quibbling by other hawks, who include Executive Board member Isabel Schnabel and Bundesbank President Joachim Nagel, hasn’t been reflected in their votes.
In Austria, few questioned Holzmann’s inflation-wary approach, which helped make him one of the most accurate predictors of central-bank policy as a surge in energy prices prompted the ECB to raise rates by 450 basis points in little more than a year.
His successor hasn’t discussed monetary policy publicly, but takes over an institution with a long-standing tradition of being more cautious on inflation than others. Unlike Holzmann, who arrived after a career almost exclusively in academic research, Kocher — a behavioral economist — comes fresh from a spell navigating messy coalition politics.
Amid a major personnel shakeup at the ECB this year, Holzmann declined to say who may replace him at the far end of the hawkish spectrum.
“With seven new people coming in, I could imagine that at least one or two of those could take over,” he said. “Definitely from the informal discussions, I know that a number of people often sided with me on substance, but not on the decision.”
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