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How the ECB Plans to Keep Markets in Check as It Hikes Rates

  • First line of defense against debt crisis 2.0 is activated
  • New tool to fight fragmentation may be presented this month
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Less than three weeks before embarking on a series of interest-rate increases, the European Central Bank is honing its plans to keep government-bond markets from panicking as it does so.

first line of defense against a sovereign-debt crisis akin to the one that struck the euro zone last decade became active on Friday. A new instrument to avoid so-called fragmentation — unwarranted blowouts in member states’ yields — is due soon to enable the ECB to respond to record inflation.