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‘ECB has flexibility to react to yield rise’

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Brussels, March 3 : The European Central Bank (ECB) has the flexibility to react if it concludes that the recent increases in bond yields would have a negative impact on financing conditions, the bank’s Vice President Luis de Guindos said.
The ECB has recently seen an increase in yields, which is partly due to the expectation of higher inflation in the US following the new stimulus package, as well as the increase in commodity prices and the recovery in global demand, Xinhua news agency quoted de Guindos as saying to the Portuguese newspaper Publico on Tuesday.
“We will have to see whether this increase in nominal yields will have a negative impact on financing conditions. If we reach the conclusion that it will, then we are totally open to recalibrating our program including the envelope of our pandemic emergency purchase program (PEPP) if necessary,” de Guindos said.
“We have room for manoeuver, and we have ammunition,” he added.
Rising government bond yields and fears over higher borrowing costs amid economic recovery have become a concern on global markets.
ECB policymakers said on several recent occasions that they have been closely watching developments in bond yields.


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