Bank confident that inflation is now under control at 2pc as impact factors ‘fade away’
“No predicament, no prescription, no commitment, but it is a case that if the data that we receive reinforces the confidence level that we have – that we will deliver 2pc inflation in the medium term, which is our objective, our mission, our duty – then there is a strong likelihood,” Ms Lagarde said in an interview with RTÉ’s Prime Time.
She and the rest of the governing council are having a two-day “retreat” in Kilkenny, which continues on Wednesday.
The council was invited to Ireland by Gabriel Makhlouf, the governor of the Central Bank of Ireland. It is understood one reason why the Mount Juliet resort in Kilkenny was chosen as the venue is because it is relatively easy to provide high-level security there.
The Kilkenny retreat is the council’s last get-together before its much-anticipated meeting on June 6. Ms Lagarde also told RTÉ she is “really confident that we have inflation under control”, because some of the factors that had a big impact are fading away. “I’m thinking about the energy crisis… the supply-chain bottlenecks, that is gradually moving away.”
As well as ECB president and Mr Makhlouf, the retreat is being attended by Philip Lane, the ECB chief economist.
Recent comments attributed to Mr Lane about the need to encourage more Irish people to apply for jobs in the bank, so that Irish ministers and officials have counterparts in the ECB they can talk to, have prompted a letter of protest to the executive board from the bank’s staff committee, which said it was “unsettled” by the statements.
“The ECB staff representatives have for years alerted the executive board about the role of nationality in hiring and promotions, and its corresponding impact on the operation of the ECB, be it on the monetary policy side or the banking supervision side,” according to the letter, which the staff have shared with the Irish Independent.
“We presented independent research evidencing the problem and also carried out our own research to document the matter objectively.”
Philip Lane, chief economist at the European Central Bank. Photo: Alex Kraus/Bloomberg
The staff committee said the response it got from the ECB was essentially denying there was a nationality problem, but the reported comments by Mr Lane had officially acknowledged “the mechanisms that we were denouncing”.
ECB staff want the role played by nationality in hiring and promotions to be monitored and made transparent, with statistics being published. These would show the number of applications versus selection rates, similar to what is done with gender targets.
Mr Lane’s comments about the need for more Irish applicants were made during what the bank says was a “private” conversation with Neale Richmond, a junior minister with responsibility for financial services. It was reported by the Business Post on March 9.
Ireland is arguably over represented in Frankfurt, with 3.7pc of management and 3.3pc of staff and trainee ranks, according to the ECB’s most recent annual report. Ireland has a 1.8pc share of ECB capital.
Among the senior Irish staff are John Fell, deputy director general for macroprudential policy and financial stability, and Sharon Finn, head of the credit risk section.
Peter Walsh, a former policy expert at the Central Bank of Ireland, is a deputy head of division in the ECB, while Stephen Woulfe, who was also with the CBI, is a head of division.
Other senior Irish staff include Ciara O’Shea, Grainne Nevin, Geoff Kenny, Colm Toolin and Meg Culloty.
A source at the Central Bank of Ireland agreed that there has been a lot of personnel movement between itself and the ECB, but noted that the same was true of itself and the Department of Finance.
“Europe is a career path and we would see the value of it. There has always been people going there on secondment,” the source said.
“Naturally there is a similarity of requirements. We come from the same ecosystem. We share an email system.”