Austrian Central Bank Top-Ranked Woman Counsels ECB Pause

The most senior woman at Austria’s central bank started her career as an experiment.

Doris Ritzberger-Gruenwald gave up an academic post to try out at the institution in 1988. The Austrian schilling was pegged to the German mark at the time and, she says, “there was nothing to analyze.” A quarter of a century later, she’s the bank’s chief economist and one of a handful of women advising the European Central Bank’s Governing Council on monetary policy. Her current tip: Do nothing.

“Alternatives or criticism weren’t appreciated” when she joined, Ritzberger-Gruenwald said in a Nov. 19 interview at the Vienna headquarters of the Oesterreichische Nationalbank, or OeNB, after its conference on European economic integration. “It was a difficult decision, and it wasn’t clear that it would be the choice that would set the course of my life.”

Research options and career prospects opened up along with eastern Europe in the early 1990s, followed by Austria’s accession to the European Union in 1995 and the founding of the euro in 1999. Ritzberger-Gruenwald, 52, was named head of the Austrian central bank’s economics department in May this year.

Since 2000, she has also sat on the ECB’s monetary policy committee, which meets 10 times a year to discuss potential measures. With interest rates near zero and few non-standard options left, devising a strategy to keep prices stable and solidify the euro area’s nascent recovery has become a challenge, and one worth taking some time to address, she said.

Rate Surprise

The ECB unexpectedly reduced its benchmark rate to a record low of 0.25 percent on Nov. 7. That was just a week after data showed inflation in the euro area slowed to 0.7 percent in October, the weakest pace in four years and less than half the central bank’s target of just-below 2 percent.

“I was surprised that the council acted so quickly,” Ritzberger-Gruenwald said in the interview. “I would have been careful about tying such a decision to a single number and probably waited until December” when the new economic forecasts she’s been working on are officially published, she said.

The ECB will present new growth and inflation forecasts on Dec. 5, including its first estimates for 2015. Policy makers will announce their monetary policy decision the same day.

Dry Powder

The institution is considering becoming the first major central bank to take its deposit rate below zero, and officials have floated ideas including asset purchases and more long-term loans to prevent deflation risks from materializing. Ritzberger-Gruenwald says they shouldn’t spring any more surprises for now.

“We just acted and now we have to see what the impact of that action was,” she said. “If I were to decide, I’d wait and see. We’re getting closer and closer to exhausting our options, so it might be a good idea to keep our powder dry.”

Ritzberger-Gruenwald’s advice is informed by her quarter-century of experience that included stints in Finland in 1992, at the height of the country’s banking crisis, and Brussels in 1994. Before her central bank career, she gained an economics degree from the University of Vienna in 1987 and spent a year at the Institute for Advanced Studies in the Austrian capital as a research assistant. She got her doctorate in 1991.

Family Commitments

The current role of chief economist has extended her influence, yet she said she wouldn’t have wanted the job five years ago because juggling family and career had already left her with hardly any time for herself. With her daughter, 18, now out of school and at university, she took the opportunity to become more engaged in shaping monetary policy.

OeNB Governor Ewald Nowotny said last week that the central bank expects to appoint more of its female staff to senior positions.

“There’s a great intellectual potential that we should use,” he said. “Promoting women shouldn’t be a feat but a normal process to honor hardworking people.”

While the next governor may be a woman, it’s unlikely to be Ritzberger-Gruenwald. Gertrude Tumpel-Gugerell, a former vice governor of the OeNB and former member of the ECB’s Executive Board, is the front-runner to succeed Nowotny. His term, which he isn’t obliged to complete, expires in 2019.

Ritzberger-Gruenwald says she still has plenty of work to do on the euro area, where she’s not yet convinced that the recovery will hold. The region’s economy posted growth of 0.1 percent last quarter compared with 0.3 percent in the prior three months, when the region exited its longest-ever recession.

The French economy, Europe’s second largest, unexpectedly contracted and Italy extended its longest postwar recession. The European Commission predicts gross domestic product will decline in eight of the 17 euro-member countries this year.

“Everybody still believes in the slow, moderate recovery but I’m beginning to ask myself how much of this is calculated optimism,” Ritzberger-Gruenwald said. “I’m still waiting for the hard facts.”

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