Mario Draghi’s quiet revolution

A nice profile of ECB president – Mario Draghi.

Apparently, in Dec-11 meeting he seemed to have gone against Jurgen Stark who wanted a pause, but Draghi chose to cut rates,. It was the first time Stark was snubbed like this which was also his last policy meeting:

On December 8 last year, Mario Draghi sat down to chair his second policy meeting as European Central Bank president.

Wearing the same understated, dark blue tie he had sported when he led the ECB to a surprise interest rate cut at his first meeting as president a month earlier, Europe’s most powerful banker wanted to hear his colleagues’ arguments on what action to take this time.

The meeting, held on the 36th floor of the ECB’s glass and steel Frankfurt headquarters, opened with recommendations from veteran policymaker and chief economist Juergen Stark, a German, according to two people present. Made in the Bundesbank’s inflation-fighting mould, Stark felt the Council should wait to see how price pressures developed before moving again. Inflation was running at 3 percent, well above the ECB’s target of just under 2 percent. This was no time to cut.

But not everyone on the 23-person Governing Council agreed. Some advocated an immediate cut. There was also pressure from financial markets and some politicians to address Europe’s problems by buying Italian bonds en masse – a splurge opposed by Stark and other hardliners on the grounds that it amounted to financing governments.

Draghi held back at first, allowing the debate to play out. But as momentum in the room began to shift behind a rate cut, he brought the Council to a conclusion. The bank would cut. It was the first time Stark, who was preparing to leave the board after 5 1/2 years, had ever been overruled on an interest rate proposal, ECB insiders say.

 Hmmm.

Interesting through out. It seems Draghi is more decisive than Trichet but it is too early to say…

 

 

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