By Marta Vilar – MADRID (Econostream) – Econostream’s ECB Tone Meter showed the Governing Council unchanged this week, while the Executive Board edged down to neutral.
The Governing Council reading held steady at -0.13, unchanged from the previous week, while the Executive Board index declined to 0.00 from +0.06. Overall, communication in the Governing Council skewed more dovish, mainly due to President Christine Lagarde’s shift from a slightly hawkish to a neutral tone, though this was partly offset by somewhat less dovish remarks from Bank of Finland Governor Olli Rehn.
Biggest Movers of the Week: Lagarde, Panetta and Rehn
Lagarde was particularly vocal this week, with the reappearance of the “good place” reference standing out in her remarks. More notable, however, was her omission of previously used hawkish-leaning language, resulting in a neutral score for her comments.
In her appearance before the European Parliament on Thursday, she said growth had exceeded expectations in 2025. However, when turning to the current and forward-looking outlook, she highlighted higher tariffs, a stronger euro and elevated uncertainty — factors she did not explicitly frame as such, but which, if anything, pointed to downside risks.
Banca d’Italia Governor Fabio Panetta, who has been relatively quiet of late, spoke last weekend. On Saturday, he described risks as two-sided — a formulation that may sound neutral — but his emphasis on the sharp increase in Chinese imports as a key factor to monitor suggested a slight dovish bias.
Also on the dovish side, Bank of Finland Governor Olli Rehn spoke this week. In a broad speech covering a range of topics rather than focusing specifically on monetary policy, he briefly commented on the economy and inflation, describing growth as “sluggish,” while noting it had weathered recent turbulence, and calling inflation and inflation expectations moving closer to 2% “good news.”
These comments were regarded as dovish but less so than his immediately previous remarks of February 6, where he suggested there was a real risk of inflation undershooting and highlighted downside risks.
Dominant Themes in this Week’s Communication: The Return of “Good Place” in Lagarde’s Remarks
With only a handful of speakers this week, there was no clear overarching theme in the communication, though a pattern did emerge in Lagarde’s remarks. The ECB President spoke on Sunday, Monday and Thursday, using the phrase “good place” on two of those occasions.
On Monday, she said she “very strongly” believed the ECB was in a good place, leaving little doubt about her confidence. By Thursday, her tone was less emphatic: she again said the ECB was “in a good place,” and added that it should remain “agile.”
