The European Central Bank's preference for making interest rate decisions by consensus rather than a majority vote by policymakers, like most central banks, has been criticized for being clumsy and slow.

But new information that the Governing Council holds informal votes suggests the central bank may be lighter on its feet than many had thought.

This could make it easier for the ECB to keep raising rates in 2007, depending on the economic outlook, as it would not have to wait for all dissenters to come on board.

But it also highlights the difficulty in interpreting comments from individual policymakers, who may be expressing personal views rather than the consensus stance.

Although the ECB's statute allows for a simple majority vote, ECB President Jean-Claude Trichet has followed predecessor Wim Duisenberg in preferring a collegiate or consensus approach.

This involves group members agreeing to back a common decision, ideally a unanimous one. Trichet has described seven of the last 10 rate decisions since this tightening cycle began last December as unanimous.

Trichet said in January that this collegiate approach allows a deeper exchange of views, rather than coming ... with a certain view and leaving with a certain view, simply after having voted.

However, a euro zone monetary source told Reuters the ECB does hold an informal vote and doesn't wait to win full support. The Council has changed rates on the basis of a majority vote on several occasions.

They have a first tour of the table to see how many are in favor of a course of action. If a minority is not in favor they are asked 'Would you like to join the consensus?' and very often they do, the source said.

If there are members of the Council who are still not in favor after the second 'tour of the table' then their dissent is simply recorded in the minutes and they act according to the majority's position.

Deutsche Bank economist Thomas Mayer said this would indicate that policymakers don't have to wait as long had been thought to make a decision.

It also tells me we should not take everything that comes from the ECB as evidence of a concerted campaign but as individual views and think about what the majority might do, he added.


Effectively guillotining the debate bypasses one of the biggest problems with consensus decision-making which, as U.S. academics Kevin Sager of the State University of New York and John Gastil of the University of Washington noted in a recent study, can allow discussions to go on indefinitely.

This is welcome news for ECB watchers such as Socialist MEP Pervenche Beres, head of the European Parliament's economic and monetary affairs committee.

Sometimes we had the view that they were slowed down by really looking as hard as they could for unanimity, she said.

Beres said voting was a sign of institutional maturity, a view shared by Tilburg University professor Sylvester Eijffinger.

I do understand that consensual decision-making was necessary in the beginning of the existence of the ECB because you don't want to have discussions according to country lines, he said.

The ECB's 18 rate-setters include 12 national central bank governors as well as six core Executive Board members, who are all bound to make decisions for the euro zone as a whole.

If you read the Maastricht treaty and the statute of the ECB the intention was that there be a vote, Eijffinger said.

Of course there should be a discussion and an exchange of views but it's also important to mark your position, and marking position is done by voting.

Sager and Gastil found evidence was divided over whether consensus decision-making was more effective than a majority vote, but they noted under consensus arrangements participants were more likely to be happy with the decision.

But the question remains about how much weight ECB watchers should give to views expressed by individual policymakers, for example over the last month when some have canvassed rate rises into 2007, some have sounded more cautious, and others have said nothing at all.

Markets are pricing in two more rate rises this year and another by mid-2007 but Mayer said it would be wrong to think the hawks necessarily had the votes on their side.

You certainly should look out for those who don't speak, he said. I've been reminded a couple of times that those who keep their silence may actually exercise their influence at the meeting.

As Trichet keeps telling us, if you want the ECB view listen to me.