(Bloomberg) -- When economists scrutinize the European Central Bank’s most senior leaders for pointers on interest rates, Christine Lagarde isn’t who they turn to first.
Only 40% of respondents in a Bloomberg survey said the ECB president was among the top two Executive Board members they follow to inform their opinions. From that six-strong panel, most prefer to listen to Isabel Schnabel, a German official in charge of markets, and then Chief Economist Philip Lane.
Among the euro zone’s 20 national central banks, the experts have most time for France’s Francois Villeroy de Galhau and his Dutch counterpart Klaas Knot, considered by some to be a possible successor to Lagarde. Germany’s Joachim Nagel, from the bloc’s largest economy, ranks third.
It’s crucial to know who’s closest to the pulse when the 26 members of the rate-setting Governing Council speak so frequently and with such a wide range of views. As policy shifts, like now, it’s even more critical: The ECB has just begun to undo a barrage of rate hikes to tackle inflation, offering little on what happens next.
The poll results reflect that Lagarde, a former French finance minister and International Monetary Fund head who arrived at the ECB with no central-banking experience, defines her role differently than her predecessors.
She mostly acts like a chairwoman brokering consensus, whereas Jean-Claude Trichet insisted on being the spokesman for the Governing Council and Mario Draghi often determined policy moves unilaterally.
“Lagarde’s speeches are very important, but they don’t capture turning points as such, or changes in signals,” said Piet Haines Christiansen, chief strategist at Danske Bank. “During her tenure, Schnabel and Lane have taken the role of giving strong analytical arguments for the monetary-policy stance.”
Lagarde’s approach was on display after last month’s rate cut, when she refused to elaborate on the timing of future steps but quipped to reporters that “I’m sure that you will hear some of my excellent colleagues take their view.”
Since then, Belgium’s Pierre Wunsch, Ireland’s Gabriel Makhlouf and Slovakia’s Peter Kazimir have said the ECB may only lower borrowing costs once more this year, with further action hinging on inflation’s retreat toward 2%. Greece’s Yannis Stournaras, on the other hand, wants two more steps, and Portugal’s Mario Centeno a “few.”
Economist favorites Knot and Nagel have been less precise. The former has only embraced market wagers for one or two reductions, while the latter has stressed that the ECB isn’t on autopilot after its initial move.
“Among the national governors, Mr. Knot is my first choice,” said Kristian Toedtmann, an economist at Dekabank. “He’s clearly in the hawkish camp, but his views are well reasoned and open to argument. His assessment that monetary policy would still be restrictive even after a few more rate cuts is a good example of this.”
Toedtmann’s No. 2 is Nagel — based on the weight of the Bundesbank — followed by Villeroy because of his centrist views.
The Frenchman has carefully refined that position since his appointment in 2015, when officials clashed heavily and often over negative rates and bond-buying.
Lately, though, he’s surprised some ECB-watchers with uncharacteristically dovish views: Before June’s meeting, he insisted that a second rate cut in July shouldn’t be excluded — something economists and markets were no longer expecting.
ECB Executive Board members tend to be less open about their personal stance than national central-bank chiefs. But while neither Lane nor Schnabel have offered specifics on rates later this year, their remarks are studied closely all the same.
Lane tends to focus his public appearances on detailed explanations of the euro-zone economy’s health — often deploying academic language that can make arguments difficult to grasp.
He drew criticism when ECB forecasts he oversaw underestimated the scale of the region’s inflation spike. He then claimed for too long that the shock was transitory.
Schnabel often sets the agenda on challenges ahead. She was the first to thoroughly discuss how the ECB may use its balance sheet and control rates in the new-normal world, or how climate change and the green transition will affect inflation.
She, too, though has been wrong on reading the economy, retaining the option of another rate hike until last December, as some colleagues wondered whether the ECB had already gone too far and analysts and markets mulled a first cut.
For Toedtmann, Lane and Schnabel are “opposites.” He said that “it’s therefore enlightening to contrast the views of the two.”
Methodology: Bloomberg surveyed 25 economists July 5-10. Respondents were asked to identify their top two Executive Board members and top three governors.
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