November 21, 2019 / 12:35 PM / 20 days ago

ECB policymakers buried the hatchet at Draghi's farewell meeting

Christine Lagarde, President-designate of the European Central Bank receives a bell from ECB's outgoing President Mario Draghi in Frankfurt, Germany October 28, 2019. Boris Roessler/Pool via Reuters

FRANKFURT (Reuters) - European Central Bank policymakers buried the hatchet at their meeting last month, dropping criticism of a money-printing program that had bitterly divided them just weeks earlier, the accounts of the gathering showed on Thursday.

The euro zone’s rate setters agreed to stay put at the Oct 23-24 meeting, which was Mario Draghi’s last as ECB President, and to give a stimulus package unveiled a month earlier more time to work its way through to the economy.

The policymakers also made a “strong call” for unity after a decision to start adding to the ECB’s 2.6 trillion euro ($2.9 trillion) bond pile had been forced through against opposition from a third of the Governing Council in September, triggering a rare public backlash.

“Looking ahead, a strong call was made for unity of the Governing Council,” the ECB said in its account of the meeting.

“While it was underlined that open and frank discussions in the Governing Council were absolutely necessary and legitimate, it was regarded as important to form a consensus and to unite behind the Governing Council’s commitment to pursuing its inflation aim,” it added.

This chimed with the approach taken by Draghi’s successor, Christine Lagarde, who last week took governors on a two-day retreat to mend fences and listen to requests for more consensual decision making.

As regards the economic outlook, policymakers noted that incoming data raised questions as to whether the euro zone’s economic weakness would last even longer than expected in September.

But they agreed to take a “wait and see” approach because the latest stimulus measures, which also included a rate cut and more generous loans to banks, needed more time to take effect.

“A plea was made for patience to allow the measures taken in September to work through the economy, supporting a ‘wait and see’ posture at the current juncture,” the ECB said.

Reporting By Francesco Canepa; Editing by Balazs Koranyi

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