ECB Hawk-Dove Ranking: Council Members Left Unchanged for Now, But Several Under Review
16 September 2021
By David Barwick – FRANKFURT (Econostream) – Econostream’s latest ranking of the members of the European Central Bank Governing Council in terms of hawkishness/dovishness has been changed solely to take into account the passage of the September 9 monetary policy meeting, so that the columns indicating voting status include only future meetings – in this case October 28, December 16 and January 20.
However, we consider the ranking of a number of Europe’s monetary policymakers to be under review and thus subject to possible change in the coming weeks. Most notably, that includes ECB President Christine Lagarde, ECB Vice President Luis de Guindos, Banque de France Governor François Villeroy de Galhau and, perhaps, National Bank of Belgium Governor Pierre Wunsch.
All four of these officials are currently ranked in the dovish camp, and with one possible exception, that will remain the case even in the event of potential revisions in the direction of more hawkishness. The exception is Wunsch, who is ranked only marginally dovish, so that any less dovishness would automatically leave him on the hawks’ side of the spectrum.
More generally, it seems indisputable that the tones emanating from the ECB of late have taken on an unaccustomed hawkish character. The brighter outlook has induced the Governing Council to grapple with the need for a gradual withdrawal of support, and perhaps the only unusual aspect of this is the profound hesitance with which it has done so.
Not all members of the Governing Council have rushed to adapt their communication accordingly, and as before, there are some members who speak publicly only very rarely. Moreover, given the critical nature of the ECB’s next steps, it is particularly appropriate for the ECB’s leadership to take a clear stand.
In the case of Lagarde, that has required a bit of an about-face, thanks to her previously adamant unwillingness to contemplate precisely the developments that she must now at long last acknowledge and draw policy conclusions from.
Assuming she maintains her present course, we envision a modest revision of her ranking in the coming weeks.
With regard to de Guindos, there has been less of a rhetorical reversal, so that an ‘upgrade’ to a slightly less dovish ranking, as may also occur in the near future, is more reflective of a slow but steady trend.
As for Villeroy, he has for some time been bullish about French growth and dismissive of the possibility of a wave of corporate bankruptcies. Our most recent impression is that his view of inflation may have evolved, and we thus consider him as well to be a candidate for a less dovish ranking.
Following a revision in his ranking at the end of April, Wunsch has gone on to join forces with Bundesbank President Jens Weidmann and stymie Lagarde’s attempt in July to change the ECB’s forward guidance on interest rates by unanimous agreement. We considered that to be insufficient grounds all by itself for a renewed change, but are unsure that our end-April revision was sufficient and are hence waiting to see how Wunsch positions himself in the coming weeks.