Draghi misses the point in defending Coeure's private, market-moving comments
In an Orwellian twist, Mario Draghi argued that private meetings with specialized audiences are "integral to its transparency policy."
He argued that because ECB weekly reports on QE purchases showed a slightly higher pace of buying in the first two weeks of May. That showed, "the start of the moderate frontloading of purchases in May (and to be continued in June) was already clearly visible, and thus publicly available information."
What a joke. Two weeks of May data shows nothing about June and nothing about slower purchases in July and August.
What next?
Despite brushing off the complaints, Draghi wrote that the ECB will take further steps in the near future.
"The Executive Board has taken your request for clarification as a trigger for further steps to be taken that improve the transparency of the ECB's communication channels. The Executive Board will present results shortly," he wrote.
Yet just this week, the ECB's Noyer was in Montreal. I a forum on Monday with Silver Lake hedge fund billionaire Glenn Hutchins, the two suggested they spent the weekend hobnobbing.
If the ECB wants to communicate with market participants, it should be at the staff level
There are reasons to discuss monetary policy with market participants, especially in the midst of an untried QE policy. But an essential part of transparency isn't just the communication, it's also cultivating the perception of fairness.
Having central bankers wine and dine with billionaire market movers erodes public confidence in central banks and the belief in market fairness. The ECB needs to show some discipline and Draghi had an opportunity to set an example but is defending the status quo.
Central bankers are public servants could use a dose of humility.