ECB Hawk-Dove Ranking: Šimkus Latest Council Member to be Ranked as Less Hawkish Than Before

20 June 2023

By David Barwick – FRANKFURT (Econostream) – Econostream has updated our hawk-dove ranking to take into account the passage of the last monetary policy meeting, so that the columns indicating voting status include only future meetings – as of today, 27 July, 14 September and 26 October.

In addition, we have re-ranked one more Governing Council member, namely Bank of Lithuania Chairman Gediminas Šimkus, leaving him classified as moderately hawkish, which is less hawkish than previously.

In keeping with the recent shift in policy attitude that motivated this re-ranking, Šimkus yesterday said, ‘Keeping in mind all the uncertainties and risks, it’s still too early to assess the need for a hike in September. But we’re coming closer or we are close to the end of rate increases.’

As previously noted, we approach re-rankings cautiously, believing that the ranking should not effectively just chase policymakers’ latest comments. Šimkus, however, has been expressing himself more dovishly for some time.

‘I think we will see a 25bp rate hike each in June and July’, he said on 30 May. ‘Will this continue in September? Let's take our time, because there is still a long time before that period and there will be at least two more rounds of forecasts - in June, September - and of course a lot of data on the economy, which at the moment I would say is sometimes conflicting.’

Even in early April, in an interview with Econostream, Šimkus, previously happy to argue in favour of large rate hikes, declined to be explicit about the possibility of another 50bp move in May, reasoning that ‘after having done so much, I need to look at the data’.

We thus think the reduction in his degree of hawkishness is easily justified.