ECB sources are being noted by Reuters as stating European Central Bank policymakers meeting last week sought a greater acknowledgement of inflation risks but were rebuffed by the bank's chief economist Philip Lane in an unusually robust debate, sources close to the debate told Reuters.
In what was described as a robust and tense meeting, a significant number of policymakers questioned the quality of the ECB's projections, pointing to their checkered track record, and argued that inflation was at risk of ending next year higher than the ECB's expectation.
"Quite a few wanted to acknowledge the upside risks but Philip (Lane) pushed back hard," one of the sources said. "After a lengthy debate we appeared to agree on a 'small upside risks', but even that was nowhere to be found in the statement."
The closest ECB President Christine Lagarde came to such an acknowledgement was when she said "there is possibly an upside risk" in response to a reporter's question. "The statement didn't quite give back the flavour of our debate," a second source said.
The sources said that several people questioned the quality of the ECB's forecasts, which have been subject to large revisions for years, and that staff models appear little equipped to calculate with the pandemic's once-in-a-lifetime shock.
~ Not for the first time, ECB's Lane appears to be playing the role of shepherd to the ECB flock.
