Governors of the European Central Bank (ECB) have expressed concerns over releasing their interest rate forecasts, in a sign an approach to follow the US Federal Reserve‘s practice may be hard to sell, Reuters reported on Monday.
They attributed their concerns saying such move could invite pressure from governments trying to determine if their central banker is serving their domestic agenda.
The concerns highlight the unique challenges faced by the eurozone, which is composed of multiple national governments as opposed to jurisdictions like Britain and the United States, which have only one.
Last week, ECB board member Isabel Schnabel of Germany proposed the idea of publishing a dot plot of policymakers’ projections about the appropriate path for rates, similar to the Fed’s practice. She argued that it would better inform markets.
However, nearly all of her colleagues from the eurozone’s 20 national central banks felt that such a move could jeopardise their independence from national governments. This sentiment was expressed during the International Monetary Fund (IMF) and World Bank spring meetings in Washington.
While the ‘dot’ forecasts at the US central bank are anonymous, ECB governors believe that politicians would attempt to identify which dot belongs to their country’s central bank chief and pressure them to express a view that aligns with their national goals.
Despite these concerns, a few governors saw some merit in the proposal and were open to discussing it at the ECB’s next review, due to start next year. One suggestion was to cluster the dots to conceal individual votes.
The ECB, while declining to comment, maintains measures to protect governors from political interference, including withholding vote splits post-policy decisions and anonymising policy meeting accounts.
