Two European Central Bank Executive Board members said the minutes from policy meetings should be published, adding to signs the ECB may soon follow other major central banks in taking the step to increase transparency.
“Transparency is important for the effectiveness of monetary policy,” Benoit Coeure said in a joint interview with Joerg Asmussen in Sueddeutsche Zeitung and Le Figaro today. The minutes should state which policy makers voted for which measures, Asmussen said.
While publication has been discussed since last year, the debate has gained intensity this month. The ECB’s chief economist, Peter Praet, told Handelsblatt on July 8 that “sooner or later, we should publish the minutes.” ECB President Mario Draghi stepped up communication on July 4 by pledging to keep interest rates low for an extended period, citing increased volatility in markets. Bond yields had surged after Federal Reserve Chairman Ben S. Bernanke said June 19 that the Fed may start paring back its monetary stimulus.
“The ECB has been frustrated for a while with constant market speculation on what the next steps could be,” said Richard Barwell, senior European economist at Royal Bank of Scotland Plc in London. “Markets constantly overreact and don’t fully understand what they actually want to do. Publishing minutes would be about educating the market.”
The Frankfurt-based central bank cut its benchmark rate to a record low of 0.5 percent in May as the 17-nation economy struggles to emerge from its longest-ever recession. Gross domestic product contracted for a sixth quarter in the three months ended March and the ECB expects the economy to shrink 0.6 percent this year.
With inflation below 2 percent, Draghi still has room to maneuver and has said that he has an open mind to do so. As well as publishing minutes from the ECB’s monthly policy meetings, his options include another cut in the benchmark rate, charging banks for depositing money at the ECB, or introducing additional long-term loans to banks.
A consensus to release the minutes may not be reached this week, when central bankers gather in Frankfurt before the next policy announcement on Aug. 1. “Every majority starts as a minority,” Asmussen said in the Sueddeutsche interview. “The discussion in the Governing Council is still ongoing.”
The ECB’s current rules, introduced under its first president, Wim Duisenberg, stipulate it should only publish minutes 30 years after the respective meeting. The Federal Reserve, Bank of England and Bank of Japan all release minutes within a matter of weeks.
“It is a complex process and we are actually thinking about how to proceed,” Draghi told reporters in October when asked if the 30-year rule might change. “We have to evaluate and assess what this means in our specific context, the European context, which is different from that of the United States and the United Kingdom.”
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