ECB Brief: Governing Council Member Vasle Strikes More Optimistic Tone than Lagarde
23 April 2021
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council Boštjan Vasle appears to have been the first Council member out of the blocks following ECB President Christine Lagarde's highly dovish press conference a day earlier, with a carefully worded statement on the monetary policy meeting that could be a harbinger of less gentle dissent to come.
In the statement issued Friday in his name by the Bank of Slovenia, which he heads, Vasle wasted no time getting to the point, declaring in the very first sentence that ‘[t]he outlook for economic growth in the euro area is improving’, driven by firms and households.
Vasle observed that the March PMI had ‘improved slightly’, that manufacturing sector expectations had ‘reached record highs’ and that the services were now expecting ‘stagnation after months of contraction’, examples of ‘slightly more optimistic data suggest[ing] that the range of sectors that have successfully adapted to the austerity measures is widening’.
‘In financial markets, the situation has also stabilised, with considerable support from accommodative monetary policy’, he said.
In view of Lagarde’s stubborn unwillingness to acknowledge the improving economic environment yesterday while speaking on behalf of the entire Governing Council, it is clear that any member, let alone a typically cautious one from a relatively small economy, would be obliged to maintain appearances and echo the ECB president to some degree.
Vasle was thus unwilling to explicitly interpret the largely positive new information as more than a confirmation of existing ECB forecasts amid high uncertainty due in no small part to ‘the still weak epidemiological picture’, though he predicted an acceleration of vaccination campaigns.
However, his mention of the negative was little more than lip service; in a statement skewed towards accenting the positive, Vasle undertook no real effort to focus on the downside à la Lagarde. He avoided any explicit characterisation of the balance of risks, a gap that may be more indicative of diplomatic discretion than anything else.
Similarly, he avoided the minefield of questions about the life of the PEPP, saying merely that the Council had ‘decided to maintain the stimulative monetary policy measures adopted so far’ and that asset purchases and refinancing operations would ‘continue to provide banks with favourable sources of funding that successfully feed through into lending conditions for households and businesses.’
His closing line sought to shift the burden away from the ECB: ‘In a low interest rate environment, there is also ample room for fiscal policies, which are crucial for a successful exit from the pandemic crisis.’
Vasle is ranked as slightly hawkish on Econostream’s hawk-dove scale. The rapidity of his effort to distinguish his own position from that of Lagarde, albeit cautiously, is probably a prelude to more vigorous pushback from other, more hawkish quarters, inevitably to be countered by the reluctance of those at the other end of the spectrum to see the least little bit of policy support withdrawn.