Lagarde seized European Central Bank colleagues' handsets to prevent leaks: Sources

European Central Bank President Christine Lagarde seized the mobile phones of her fellow policymakers at this week's meeting and rebuked them for leaking crucial information ahead of a policy decision, two sources told Reuters.

The unprecedented move is the boldest step that Lagarde has taken to stop information leaking out from the Governing Council, an issue that has plagued her presidency as well that of her predecessor, Mario Draghi.

The 26 members of the Governing Council were told to hand over their mobile phones on Wednesday, the first day of the meeting, as policymakers were about to pick Claudia Buch as the ECB's top banking supervisor, the sources familiar with the matter said.

The handsets were returned after Buch's nomination as chair of the Single Supervisory Board, which oversees more than a hundred of the euro zone's biggest lenders, had been announced, the sources added.

The decision was taken because the choice in 2018 of the current chair, Andrea Enria, appeared in the media before the official release, the sources said.

An ECB spokesperson declined to comment.

Lagarde's move came a day after Reuters exclusively revealed the ECB would raise a key inflation forecast this week, which paved the way for an interest rate hike on Thursday.

Most economists and traders had expected the ECB to keep rates on hold, but many changed their view after the Reuters report was published late on Tuesday.

Lagarde stigmatised the leak at the start of the two-day meeting, a criticism that was echoed by several colleagues.

Divided

Lagarde inherited a divided Governing Council from Draghi, who had alienated so called hawks in the euro zone's north with his ultra-easy monetary policy and abrasive management style.

She has steadily tried to create a more harmonious atmosphere and several sources agree she has largely succeeded.

Ironically, her efforts were helped by painfully high inflation over the past two years, which reduced the room for dissent and effectively forced the ECB to embark on a streak of interest rate hikes.

But as borrowing costs were pushed higher, more policymakers expressed reservations about further hikes, the sources said.

Lagarde said on Thursday the latest increase was backed by "a solid majority of the governors", compared to all of them for the previous rise in July and a "very, very broad consensus" a month earlier.

Lagarde has spared no effort in trying to woo her colleagues.

Weeks into her term in 2019, they gathered at a German mountain castle where she pledged to spend more time listening, and not to front-run decisions before policymakers had weighed in, as Draghi was often accused of doing.

In return, she asked for governors to stop trashing policy decisions once taken, keep internal disputes out of the media and put their phones away while colleagues were speaking.

She also set informal guidelines last year instructing colleagues to present the majority view to the public after the ECB's policy decisions, which are published on Thursdays, and hold back "personal" views until the following Monday.