Lesson learnt: People walk in front of ECB headquarters in Frankfurt am Main. The lesson for the ECB is that it must ensure there’s a level playing field among who gets access to information (and policymakers), to avoid any perception of bias. — AFP
THE European Central Bank (ECB) 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 policymakers), to avoid any perception of bias. This may mean avoiding these calls altogether.
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