Christine Lagarde, head of the ECB, began one of her most complicated press conferences just two months ago with an uncomfortable leak. In the midst of financial turbulence due to the banking crises in the US and Switzerland, Bloomberg had published a leak about the meeting of finance ministers that had been held two days earlier in Brussels just an hour before Lagarde’s conference began. According to this medium, the vice president of the monetary authority, Luis de Guindos, had warned the governments that the EU housed banks with business models that were also vulnerable to rate hikes. The information added more pressure to the French, which had to convince investors that it could continue raising interest rates while stabilizing the markets. He did it based on a triple recipe: he continued with his plans to increase the price of money, he warned that he had sufficient instruments to put out any financial fire and he highlighted the solidity of the European banks. On that day, that scheme worked, but it’s not always the case.
The ECB headquarters stands almost like an information bunker, especially when compared to the bustle of the EU institutions based in Brussels. Frankfurt handles highly sensitive data. Any small movement can cause a big lurch in the markets, for better and worse. And the monetary institute, jealous of the flow of news, has just published a study on the impact of information with anonymous sources, which concludes that investors would do well to ignore it. According to the document, between 2002 and 2021 there were 368 leaks from within the Eurosystem to the three Anglo-Saxon media analyzed: Bloomberg, Reuters and Market News. They are, on average, twenty publications a year. It does not seem like a high number at first glance, although it does if you put it into perspective: there are eight government councils a year.
The data compiled by the ECB researchers indicate that the peak of news without an attributable source occurred at the end of Mario Draghi’s tenure, when these media published more than 30. These are the years in which the former president of the institution had to face off in not a few councils with the hawks for the continuation of the debt programs and in which some bankers were already beginning to apply to succeed the Italian. Leaks, according to Eurobank, occur above all when the most controversial decisions are made. That is, those who have a difficult balance in the institution.
ECB officials are concerned not only about the amount of information that has been reported to the media from anonymity, but also about its impact on the markets. The Eurobank economists have analyzed the movements in the swap markets in windows of 35 minutes duration and have concluded that the news attributed to anonymous sources have much more effect than the information derived from statements by members of the Governing Council. In addition, news about interest rates have a greater impact on financial products with shorter maturities, while those referring to other instruments act on long-term indicators.
“Minority” Views
The president of the ECB, Lagarde, has insisted almost from the beginning of her mandate to her colleagues in the Governing Council to avoid leaks to the press about the decisions that had to be made on rate hikes. Eurobank analysts believe that the leaks also tend to reflect “minority points of view”, which on many occasions lead the markets to reflect interest rates that are far from the actual results of the monetary policy that is being pursued. “That leads to the conclusion that many leaks only add noise to the debate and volatility to the markets,” the ECB says in a blog post. “Our findings suggest that market participants would do well to ignore such unattributed information.”
The ECB was particularly concerned about the leaks before the press conferences in which it announces its decisions on monetary policy – for example, a rise in interest rates. However, in recent times such information from anonymous sources has been given more and more after the meetings. Again, the Eurobank sees the same pattern repeating itself: while statements that can be attributed to a source serve to reinforce the message that the ECB wants to give, anonymous ones go in the opposite direction. “Our results show that post-meeting leaks can weaken the effects of official ECB policy announcements,” the entity adds.
Follow all the information on Economy and Business on Facebook and Twitteror in our weekly newsletter
Five Days agenda
The most important economic appointments of the day, with the keys and the context to understand their scope.
RECEIPT IN TU CORREO
Subscribe to continue reading
Read without limits
