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Anders Svendsen, analyst at Nordea Markets, points out that Ms Lautenschläger has resigned from the ECB Executive Board before the end of her term, leaving the ECB one hawk down.

Key Quotes

“No reasons for the resignation were given in the short press release, but that will of course not stop anyone from speculating. One such speculation is that Ms Lautenschläger’s resignation be a protest against the September easing package, which the German Executive Board member was against. Two hawkish German predecessors ended their terms early, discontent with too dovish ECB policy, encouraging the narrative.”

“There is no doubt about the hawk-dove split within the ECB, but unless Ms Lautenschläger knows something about the soon to be ECB President Lagarde that the rest of us don’t, then it would be a little strange to leave in protest a month before a leadership change that potentially could bring changes to policy as well.”

“For now, the ECB is one hawk down. Not that it matters much when the doves are in majority. Moreover, the replacement – most likely being German – is highly likely to be in the hawkish camp too.”