Christine Lagarde announced at her first press conference as president of the European Central Bank (ECB) in late 2019, “I myself and therefore probably different.”
That moment, indicating his intention to impose a personal seal on the institution’s communications, coincides with a specific approach since he took office on November 1 last year. This is too much of a break with the past, even given the extraordinary events of the coronovirus crisis that dominated his reign.
The new style, in keeping with Lagarde’s purpose of building a “bridge with the public”, often means more frequent comments by the president and the executive board than his predecessor, Mario Draghi. This brings with it the benefit of greater engagement and openness, but also that mixed or unpublished messages can roam the markets.
A major examination of her communications approach took place last week with a decisive and clear message that was widely praised by investors. The Governing Council’s consensus helped to see that Europe would need more incentives to deal with the possibility of a recession with the second wave of the coronovirus epidemic.
Carson Brudsky, an economist at ING Germany, said, “Sometimes it is difficult to tell who wants to listen to whom, while it was clear with Dilly.” Yet Lagarde is now “accepting what the ECB president needs in terms of communication.”
In the seven weeks between the September and October policy meetings, the six-member board racked up more than 60 public appearances through online conferences, blogs and interviews on a range of topics.
The President himself has been cheerful with the media. The ECB’s website lists 14 interviews by Lagarde over the past 12 months. She compares her predecessor to a single in the final year who rarely spoke to personal news outlets.
The cynicism of some of the board’s incitements can be understood from the ECB’s state of vigilance which gives officials plenty to talk about. Working through videos instead of attending events has also made it much easier for invitations to get in their way.
Nevertheless, the ECB’s multi-channel, all-hours approach to broadcasting its ideas has been notable. Lagarde also succeeded in nearly elevating himself on 19 October when he spoke at a French event and released a pre-recorded statement at a separate conference within minutes.
More communication can strengthen public engagement and Lagarde sees the ECB as lacking in understanding. It is part of a review of the institution’s strategy, which has given civil-society organizations the opportunity to address concerns. He has also spent time on Germans fascinated by poor returns due to negative interest rates.
Nick Kounis, an economist at ABN AMRO in Amsterdam, said, “If you’re talking only to markets that were previously ECB practices, you can’t reach the general public.” “Lagarde is trying to change him. But if you’re talking to two different groups, you need to think carefully about who and when you’re talking.”
There was a lesson he learned the hard way between communicating with investors and balancing plain speaking. In March, when LaGuard suggested that the ECB does not see its role as curbing the integrity of the euro, investors dumped Italian bonds.
Continued messaging by many board officials also makes the ECB a tough assessment of policy, according to ING’s Brewsky. The benefit of the drawn era, he says, was that the then president and his chief economist, Peter Pratt, said that it was enough to form an attitude.
But the allegations leveled against the former chief accuse him of taking decisions in a smaller scope rather than forging a broad consensus. Dhani was included in a strongly divided governing council, consisting of the board and 19 national central bank governors.
That legacy has already forced LaGuard to speak less on policy until allies have been consulted. While this has helped re-establish the notion that disagreements should remain behind closed doors, for example, the cracks almost certainly re-emerge, for example how the ECB needs to extend the stimulus in December needed.
The question of how the governing council’s unity will be a significant challenge for the ECB’s incoming communications chief Wolfgang Prissel next year.
The result for now is that Lagarde has established himself as a public figure of the ECB that is central to projecting his institution’s image, but is less recognized as the principal communicator of its message.
“He is not really the one who shows force as head of the ECB, so you have to pay attention to other people as well,” said Jan von Zerich, the chief strategist of Nordia Bank ABP. “Time will tell how Lagarde will approach. From the market point of view, the Dragahi way was more clear and more efficient. “
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