The Governing Council of the European Central Bank (ECB) will maintain this Wednesday a emergency meeting to discuss the market situation. “The Governing Council has an ad-hoc meeting this Wednesday to discuss market conditions,” confirmed a central bank spokesman.
The meeting takes place after the Yields required for Italian or Spanish bonds have reached 2014 levels this week, above 4% in the case of the 10-year transalpine debt and 3% in that of the Spanish.
The German representative on the ECB board, Isabel Schnabel, stressed yesterday that the body will not “tolerate” an increase disorderly growth of risk premiums that poses a risk to the transmission of monetary policy.
“We are not going to tolerate changes in financing conditions that go beyond fundamental factors and that threaten the transmission of monetary policy,” Schnabel said during his speech at an event in Paris.
Along these lines, the President of the ECB, Christine Lagarderecalled last week that the ECB has instruments to combat fragmentation, such as the ability to reinvest debt acquired under the anti-pandemic program (PEPP), which will be implemented with total flexibility of time and jurisdictions.
“As we have already shown, we will deploy other existing instruments or those necessary to prevent fragmentation from preventing the proper transmission of monetary policy,” added the Frenchwoman, noting that there is no specific level of risk premiums or returns on the debt that could trigger central bank intervention.
“We will not tolerate a fragmentation that prevents the transmission of monetary policy,” he concluded.
The ECB decided at its meeting last week to terminate its asset purchase program and announced that it will raise interest rates by 25 basis points in July, in addition to anticipating another rate hike in September whose intensity will depend on the evolution of the inflation outlook.
The Spanish Stock Market rebounds strongly, 1.68%, pending the Fed and the ECB
The Spanish Stock Exchange, after four sessions of fallsrebounds 1.68% this Wednesday, pending decisions on interest rates by the US Federal Reserve (Fed), and the emergency meeting called by the European Central Bank (ECB) to analyze the situation of the bond market.
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At the start of the session, the Ibex 35, the main national indicator, which in recent sessions has lost almost 9%, manages to rise that 1.68%, to 8,202.10 points. Losses for the year are reduced to 6.06%.
While waiting for the Fed and the “emergency” meeting held by the ECB, according to Bloomberg, the yield on sovereign bonds relaxes, and the ten-year Spanish debt falls to 3.03%, while the risk premium falls sharply, down to 128 basis points.