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ECB set to unveil QE dispute as meeting summaries go public

[FRANKFURT] The European Central Bank is about to lift the veil on how it pushed through unprecedented stimulus against the wishes of some of its members.

In a revamp of its communications, the ECB will on Thursday publish a summary of its monetary-policy meeting for the first time. The document should make interesting reading as it'll cover the Jan 22 deliberations behind the Frankfurt-based institution's controversial choice to start quantitative easing.

President Mario Draghi's strategy carries risks for a central bank that requires its policy makers to act on behalf of the entire currency bloc rather than just their own nations. While the summaries won't attribute views to named officials, they still threaten to harden the stances of Governing Council members from widely diverse economies.

"With the publication of accounts, people will have their dissent on the record," said Marco Valli, an economist at UniCredit SpA in Milan. "Disagreement is natural when you have 25 people sitting around a table trying to find a sensible monetary policy response to the current macro picture."

The accounts will be released at 1:30 pm in Frankfurt, and generally published four weeks after each monetary-policy meeting. Summaries of the two non-monetary policy meetings in each six-week cycle will not be issued, and the full minutes of all discussions will continue to be kept secret for 30 years.

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Bringing the ECB more in line with the Federal Reserve, Bank of England and Bank of Japan has been long in the making. Mr Draghi said in October 2012 that officials were "collectively" considering whether to publish minutes of their meetings.

He said the key concern was how to balance transparency against the risk of a "re-nationalization of monetary policy." The ECB has avoided revealing the views of governors so that they don't come under political pressure from their home nations that could influence their decision-making.

The issue was finally settled in July, when the central bank said accounts would be published as of 2015. Over subsequent months, officials experimented with multiple formats, and Mr Draghi spelled out some of the factors they were considering at a press conference in November.

"One is the need to preserve independence for the members of the Governing Council," he said. "The second one is the need to preserve candor in the exchanges. The third, which is probably the most important, is to give information to the markets on how to better interpret our monetary-policy decisions."

By not naming governors, the central bank intends to keep safeguards against political pressure. Sections on the views of Executive Board members Peter Praet, the ECB's chief economist, and Benoit Coeure, who is responsible for its market operations, will be included.

What analysts may seek most is more insight into the reasoning of officials trying to agree on a unified policy for 19 economies. The task became harder in recent months as some nations slid toward deflation while others, notably Germany, posted stronger economic growth.

After supporting a series of interest-rate cuts that took borrowing costs to almost zero in 2014, German members of the Governing Council Jens Weidmann and Sabine Lautenschlaeger balked at asset purchases. They led opposition to large-scale bond-buying at the Jan 22 meeting, with some support from Klaas Knot of the Netherlands, Ewald Nowotny of Austria and Estonia's Ardo Hansson.

"Now that people know what they say is for the record, there might be some who are more careful on how they state their position, but others will also want to make their case more forcefully," said Thomas Harjes, senior European economist at Barclays Plc in Frankfurt. "More transparency is always welcome."

The summary is likely to use language that nods at the principle of collective action for the good of the euro area. Mr Draghi told reporters after the QE decision that "it's the first time that we'll have the accounts be published of this meeting, and so we have also worked out some qualifiers to indicate how the meeting proceeded." He said governors were "unanimous" in agreeing that QE is a valid policy tool, that a "large majority" wanted to start it right away, and that there was a "consensus" on risk- separation measures.

That's less explicit than at other major central banks. The Federal Open Market Committee, the BOE's Monetary Policy Committee and the BOJ all publish the votes of individual policy makers at meetings.

In the minutes of its February meeting published on Wednesday, the BOE said that while all officials voted in favor of maintaining the policy stance, two members saw the decision as "finely balanced." The FOMC and BOJ indicate the level of support for specific arguments in discussions with phrases such as "many" or "a few" participants. Minutes of the Jan 27-28 FOMC meeting published on Wednesday showed many officials were inclined to keep rates near zero "for a longer time" on account of the stronger dollar and sluggish housing market.

While the ECB's Governing Council can vote on policy proposals, it rarely does and opted not to do so on Jan. 22. Still, the summaries are bound to reflect that some arguments fail to carry the day.

"They'll try to have a broad consensus first," said Alexander Koch, an economist at Raiffeisen Schweiz in Zurich. "But in the end it's the majority that counts."


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