, Columnist
The ECB Deserves This Bout of Political Hot Water
It had room to overbuy Italy last month, if it wanted to. And it should have.
Fiddling with German redemptions while Italian bonds burn
Photographer: Giulio Napolitano/BloombergThis article is for subscribers only.
The European Central Bank's QE bond buying has come under unusual scrutiny. The central bank doesn’t deserve to shake off charges of political favoritism particularly quickly.
The bank said Monday that it underbought Italian bonds and overbought German securities in May, relative to its economy-weighted guidelines for monthly purchase amounts known as the capital key. As a reminder, last month the spread between Italy and Germany blew out to levels that started reminding everyone of the Greek debt crisis, and this served as evidence of investor nervousness about Italy’s struggles to form a government.