Financial Markets and Dissent in the ECB's Governing Council

The decision-making process in the ECB's Governing Council remains opaque as the ECB, in contrast to many other central banks, does not publish the votes for or against a policy proposal. In this paper, we construct an index of dissent based on the ECB presidents' answers to journalists' questions during the press conference following each meeting. This narrative account of dissent suggests that dissenting votes are cast frequently. We show that the non-forecastable component of dissent weakens the response of long-term interest rates to policy surprises and thus affects the monetary transmission mechanism. The yield response is significantly stronger under unanimity compared to dissent. This finding is robust to several alternative specifications.