Secret “Diaries” Show ECB Board Members Met With Banks, Hedge Funds “Days” Before Policy Meetings

Monday, November 2, 2015
By Paul Martin

by Tyler Durden

Back in May, the ECB’s Benoit Coeure told a non-public audience of hedge funds in London that “the central bank would moderately front-load its purchases in its quantitative easing program because of the seasonal lack of market liquidity in the summer.”

The reaction was a 50 pips drop in EURUSD.

The problem: this was inside information. It wasn’t released to the trading public until around 8am the next day (London time) when it resulted in a further 150 pip plunge.

As egregious as this obviously was, it didn’t surprise us or anyone else who’s predisposed to skepticism about the relationship between policymakers and those who essentially gamble on policy decisions. Indeed, it was simply another example of nefarious intermingling between central planners and a select group of private sector operators and came just as Jeb Hensarling began to turn up the heat on Janet Yellen regarding leaked Fed minutes.

Now, As FT reports, “some of the European Central Bank’s top decision-makers met banks and asset managers days before major policy decisions, and on one occasion just hours before, copies of their diaries reveal.” Here’s more:

The disclosure of the meetings comes at a time of heightened scrutiny of the contacts between central bankers and the financial services industry. Earlier this year, the ECB launched its own review of the issue, setting out new principles for how its officials should interact with the private sector.

The meetings offer a sharp contrast with the Bank of England, which prohibits members of its rate-setting committee from talking to media and “other outside interests” on monetary policy matters in the week before a policy decision.

The diaries show two members of the ECB’s executive board, Benoît Cœuré and Yves Mersch, met UBS bank the day before a two-day policy meeting of the central bank’s rate-setting governing council on September 3 and 4 2014.

Mr Cœuré also met BNP Paribas bank on the morning of September 4, the day the ECB’s governing council surprised markets by cutting interest rates. It also announced it would begin buying private sector assets to save the eurozone’s economy from the threat of deflation. UBS and BNP Paribas declined to comment.

The Rest…HERE

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