The European Central Bank will need to see signs of “panic” in the markets to trigger the new bond-buying program, the board member said. of the ECB, and governor of the central bank of Italy, Ignazio Visco as reported by Reuters.
The official also referred to the recent spike in Italian spreads amid political uncertainty in Italy. “The distance [από το αντίστοιχο γερμανικό] at the moment it doesn’t show any significant turbulence or any uncontrollable situation,” Visco noted. The spread on Italian bonds has climbed close to 245 basis points.
“This is critical: if tomorrow we start seeing it at 250 bps, 255, 260 and so on – which means there is panic in the market, then we will take action to stop it,” he added.
At its last meeting, the ECB announced a new instrument to protect the transmission of monetary policy, the “Transmission Protection Instrument” (TPI). The TPI will ensure that the direction of monetary policy is transmitted smoothly across all euro area countries. The central bank clarified that the scale of purchases through the TPI will depend “on the severity of the risks posed to policy transmission”.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
