A bombshell report dropped today that said ECB governing council members plan a challenge to ECB President Mario Draghi tomorrow.
Reuters had the scoop and said the challenge is:
..over what they see as his secretive management style and erratic communication and will urge him to act more collegially, ECB sources said.
Draghi saying he wanted to increase the ECB balance sheet by €1 trillion particularly irked other governing council members.
Even members of the ECB’s executive board – the six-member inner circle that runs the bank – were not informed in advance about two key recent policy announcements, two sources said.
Those were a key passage inserted into Draghi’s speech at the U.S. Federal Reserve’s Jackson Hole conference in August, in which he highlighted falling euro zone inflation expectations and vowed to act to counter them, and his Sept. 4 comment during a question-and-answer session that the ECB aimed to expand its balance sheet “towards the dimensions it used to have at the beginning of 2012″ at the peak of the euro zone crisis.
Draghi
The euro is rallying on the news because the discord makes it more likely the ECB won’t have a strong leader and be able to implement QE. He might also be replaced by someone more hawkish.
What makes me think that the discord didn’t come out of the blue is that just over a month ago there were rumors in the Italian press that Draghi might leave the ECB to succeed Giorgio Napolitano as Italy’s President.
The Italian President role is mostly ceremonial so it seemed like a demotion but if Draghi was going to be pushed out, or he was unhappy, it makes much more sense.
The full Reuters story on Draghi is here.
