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European Central Bank policy maker Olli Rehn played down a report that President Mario Draghi ignored internal advice on last month’s stimulus package, and said he’s counting on incoming President Christine Lagarde to resolve the bitter split that has opened up.
A Financial Times article on Thursday, saying the officials who do the preparatory work for policy decisions recommended against restarting bond purchases, is “greatly exaggerated and actually misunderstood,” Rehn said in a Bloomberg TV interview with Francine Lacqua in Helsinki.
“For certain sensitive issues such as resuming quantitative easing, resuming net asset purchases, it’s definitely for the Governing Council to decide,” the Finnish central banker said. “I found nothing extraordinary in this sequence of events and the letter of the Monetary Policy Committee.”
The stimulus package was one of the most controversial decisions under Draghi’s eight-year term, which ends on Oct. 31. Around a third of the Governing Council opposed restarting bond-buying and officials from the Netherlands, France and Germany aired their dissent in public. The ECB’s summary account of the meeting will be published Thursday.
Rehn warned that while the difference of opinions was natural, it could undermine the effectiveness of ECB policies. Lagarde “has many abilities and one of her great abilities is team-building and that’s something that we are certainly also counting on,” he said.
“I myself am a product of democratic culture and football teams so I value team play, team work also in communication,” he added. “If you are divided you tend to lose games. If you are united you tend to score and tend to win games.”
Rehn insisted that it will be “quite some time” before the ECB reaches self-imposed limits on QE, which cap its holdings of government debt to a third of total issued by each member state.
He also said he hopes the new ECB president will launch a policy review, a step he has long advocated, with the aim of better defining the price-stability target and improving “the consistency of communication.”
“It’s an important issue to discuss,” he said, and his reading is that Lagarde has indicated a willingness start such a strategic review.
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