Economics
ECB Weighs Pace of Stimulus as Bond Rout Spurs Calls to Act
- Officials ask if market moves risk ‘unwarranted tightening’
- Governing Council is diverging on the answer to that analysis
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European Central Bank officials are taking a leaf from former President Mario Draghi’s playbook as they ask if recent market moves amount to “unwarranted tightening” that requires action.
That test, deployed by Christine Lagarde’s predecessor in 2014 in the run-up to negative interest rates and quantitative easing, is relevant now as the euro-zone economy lags behind the global recovery from the pandemic. Yet the ECB starts its two-day policy meeting on Wednesday apparently divided on whether recent gains in government bond yields should be a source of concern.