ECB President Christine Lagarde seized the cell phones of central bank governors in the last meeting of the Eurotower Governing Council, which began on Wednesday and ended on Thursday, 14 September, with the announcement of yet another increase in euro area rates, equal to +25 basis points. This is what Reuters reports, highlighting that Lagarde’s unprecedented move was taken after the news agency itself had reported the indiscretions, revealed by a ‘mole’ in Frankfurtaccording to which the central bank would have announced, in addition to the decision on rates, that it had also revised the outlook on inflation in the Eurozone for 2024 upwards. Which, in fact, on ECB-Day, it happened.
Lagarde, the Reuters article reported today “Lagarde seized ECB colleagues’ handsets to prevent leaks” signed by Balazs Koranyi and Francesco Canepa, he would have confiscated the cell phones of his colleagues out of fear a new leak.
Lagarde seizes her colleagues’ cell phones. Here’s how she went
The seizure of the central bankers’ smartphones took place, the Reuters news agency reported, citing two sources close to the ECB, on Wednesday 13 September. on the first day of the ECB Governing Council meeting, on the occasion of the appointment, by the same governors, of Claudia Buch as the new president of the Eurotower Banking Supervision, or of the Supervisory Board, in place of Andrea Enria.
According to the sources, the 26 members of the ECB Governing Council were forced to hand over their smartphones, after having been reprimanded, among other things, by Lagarde, who was rather irritated by the dissemination of strictly confidential information on the eve. The cell phones would be returned to the central bankers after the announcement of Bach’s appointment as Chairman of the Supervisory Board.
Reuters specified that the seizure occurred to avoid a leak of information similar to what occurred in 2018, when the markets learned of the appointment of Andrea Enria as number one supervisor of the ECB before the official press release was released.
An ECB spokesperson refused to comment on the rumors reported today by Reuters.
The Reuters article highlighted how Christine Lagarde, already in the eye of the storm for her obstinacy in raising interest rates in the Eurozone, accused of continuing her battle against Eurozone inflation at the cost of inflicting a severe blow to the bloc’s economy, confiscated the smartphones of his colleagues after another leak of information on the ECB’s economic projections for inflation.
Lagarde would have spoken about this leak on Wednesday, at the beginning of the Eurotower meeting, not sparing criticism of its governors.
Those rumors about the decision of ECB experts to revise upwards their estimates for headline inflation for 2024 they had been discounted above all by Eurozone government bonds rekindling, in the specific case of Italy, concerns about the stability of BTPs and the BTP-Bund spread.
The Reuters agency had reported the tip-off according to which ECB experts have revised the outlook on the inflation rate in the euro area for 2024 upwards to over +3%, therefore above the +3% that had been forecast in June.
The rumors had frozen the stock markets and government bonds in the euro area, triggering traders’ speculation on yet another monetary tightening by the ECB led by Christine Lagarde from around 41% on Monday 11 September to approximately 70%.
So, in fact, it happened.
ECB rates, where we are: watch out for BTPs
Despite the European Commission’s decision to cut estimates on GDP of the EU and, in this specific case, of the Eurozonelast Thursday 14 September the Eurotower raised rates by 25 basis points, leading to interest rates on the main refinancing operations, the marginal lending facility and the deposit facility respectively al 4.50%, al 4.75% and al 4.00%effective September 20, 2023.”
As anticipated by Reuters, ECB experts have raised the macroeconomic projections formulated for theeuro area headline inflation.
An average inflation rate is now expected to 5.6% in 2023, 3.2% in 2024 and 2.1% in 2025, as a result of an upward revision for 2023 and 2024 and a downward revision for 2025.
It must be said that both the equities and the BTPs toasted, precisely on ECB-Day, to magic phrase on rates contained in the Eurotower press release.
However, it is also true that, already in the session yesterday Friday 15 September, also in the wake of the hawkish bomb dropped by the Financial Times and some statements made again by Christine Lagarde at the Eurogroup meeting, BTPs are once again under attack from sales, so much so that rates jumped by 11 basis points, recovering the entire drop reported on ECB Day, when perhaps the traders had made a mistake in betting on Lagarde’s last act.