Outlook: Central bankers
Wednesday 20 January 1999
In theory, therefore, the bulletin ought to carry at least as much clout as the Bank of England's quarterly inflation report, essential reading for anyone active in the UK markets. In practice, the ECB bulletin is nothing of the kind. Yesterday's issue was a combination of public relations puffery and largely historic economic analysis. As a guide to either the ECB's view on recent economic developments or the likely level of future European interest rates, it was little short of useless.
This shouldn't come as much of a surprise, given the opposition of Wim Duisenberg, ECB president, to improving the transparency of European monetary policy. Mr Duisenberg has rejected calls for the ECB to follow the example of the US Fed and the Bank of England and publish the minutes of its meetings.
He also seems to have eschewed the established practice of using public speeches to signal changes in interest rate policy. Just days before December's co-ordinated cuts in European interest rates, for example, Mr Duisenberg was intimating to all and sundry that there was no immediate need for interest rates to fall.
As a result, financial markets now take everything the ECB president says with a large pinch of salt, including the assertion in yesterday's monthly bulletin that European interest rates are now at about the right levels.
One reason why Mr Duisenberg has chosen to shroud the ECB's decision- making process in secrecy is that this is the way things were always done at the German Bundesbank, a model independent central bank with an "inflation-busting" reputation superior even to that of the US Fed.
Certainly you cannot quarrel with the Bundesbank's record, so who are we to challenge its methods? Times change, however, and what may once have been appropriate for Germany hardly looks like doing the trick for Europe as a whole.
The Bundesbank could get away with not talking to the market for one reason, and one reason alone - its impressive track record. Bundesbank officials had a long history of keeping inflation under control and firmly resisting political pressure. The same is unlikely to be true of the ECB.
The short history of the ECB to date has been marred by political fudge, most visibly over Mr Duisenberg's own appointment as its president. If the ECB is ever to enjoy the same reputation as the Bundesbank, and if Mr Duisenberg is going to be able to soothe troubled markets as effectively as that doyen of central bankers, Alan Greenspan, transparency and communication have to be improved.
- 1 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 2 Ben Affleck asked TV chiefs to hide slave-owning ancestry, new hacked Sony emails published by Wikileaks claim
- 3 Driving while dehydrated can be just as dangerous as drink driving, study suggests
- 4 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
- 5 One Direction: Louis Tomlinson launching his own record label, has already 'signed two acts'
Isis video purports to show beheadings and execution at gunpoint of 30 Ethiopian Christians and destruction of churches in Libya
Rarest Beanie Baby of them all could be sold for £62,500 on eBay
Professional big game hunter Ian Gibson crushed to death by elephant during hunt
Driving while dehydrated can be just as dangerous as drink driving, study suggests
Ben Affleck asked TV chiefs to hide slave-owning ancestry, new hacked Sony emails published by Wikileaks claim
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...