A Central Bank of Flexibility.

• Author: Lagarde, Christine

Traditionally, the European Central Bank has reflected a relatively cordial environment of mutual respect even when there have been serious policy differences. Policymakers work hard to create the impression of consensus. This was even the case during President Mario Draghi's tenure, when his German colleagues were often in fierce opposition.

All of this has changed. Many policymakers today are privately scornful of President Christine Lagarde's lack of fundamental understanding of monetary policy. "We really don't listen to her anymore," a policymaker told TIE. Lagarde's general practice is to read the statements provided by ECB Chief Economist Philip Lane. Lane is described as having the intellectual sophistication in monetary affairs that Lagarde lacks, but seems to be influenced in his thinking by one impulse when confronted with a difficult decision: delay, delay, delay.

Many colleagues were confused with Lane's decision in March to have Lagarde stick to February staff projections which called for an inflation rate in 2023 of only 2.1 percent and in 2024 of only 1.9 percent.

Even more confusing is that at the March 10 Governing Council meeting, there was said to be little discussion of possible second-round inflationary effects even though trade unions in some countries are expected to ask for higher wages in coming months to deal with higher energy and other prices.

The ECB leadership has recruited Vice President Luis de Guindos to reach...