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MNI BRIEF: ECB To Monitor Yields, Tightening Credit Standards

(MNI) London

The European Central Bank will monitor the effect of rising nominal yields on the favourability of financing conditions, and also look at a tightening of credit standards reported in its January Bank Lending Survey, an account of the ECB's January meeting showed, echoing an MNI report of a debate brewing over how long spreads can be compressed via monetary policy.

"Views were exchanged" on the interpretation of the results of the bank lending survey, the account showed, with concern noted over a possible surge in bad loans and further tightening ahead. On the other hand, it was recalled that reported credit standards had tightened much less than in previous crisis episodes, and could be interpreted as a return to more normal conditions.

When taking the increase in market-based inflation expectations into account, real yields were at historical lows, members noted, according to the account.

MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com
MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com

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