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ECB economics head creates new hub for policy makers' forecasts
[FRANKFURT] The recently appointed head of the European Central Bank's economics staff has just created a new hub devoted to the projections that underpin the institution's policy making, expanding a revamp of his department begun in July.
The Forecasting and Policy Modelling Division will report directly to Frank Smets, the ECB's Director General for Economics and a former chief adviser to President Mario Draghi, a spokesman said on Monday.
Mr Smets took over the leadership of the department in January. He has appointed Guenter Coenen, previously a senior adviser in the Directorate General Research, to head the new office.
The ECB's economics directorate has been split historically into two halves - one in charge of economic developments and one responsible for monetary policy - with the former coordinating the institution's quarterly macroeconomic projections.
In July, the heads of both those divisions were promoted to director generals, the same nominal rank as Smets though he is more senior.
"The new Forecasting and Policy Modelling Division will provide input into the projections," the ECB said in a statement provided by email.
"The projections will continue to be based on input from several divisions across the bank. There are several Eurosystem committees that manage the projection process."
The ECB compiles economic forecasts once a quarter in coordination with its member central banks around the euro region, and policy makers have often hinged major stimulus moves around those projections.
The most recent outlook was released at its decision this month, and the next will be published after the Governing Council meeting on Dec 14.
Forecasts for inflation have been revised down twice since the start of this year. The ECB aims for average price growth just below two per cent over the medium term, and officials have been trying to achieve that sustainably for years through a range of non-standard policy measures including negative interest rates and quantitative easing.
Mr Coenen, who will now take over parts of the calculations, started working at the Bundesbank in 1996 before switching to the ECB just after its creation in 1998.
While Mr Smets is the most senior ECB career official in charge of economics, Peter Praet is the institution's chief economist, serving on its Executive Board.