June 16, 2022 17:33 GMT
Lagarde Reportedly Outlines Triggers For New Anti-Fragmentation Tool
ECB
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Bloomberg cite sources in reporting that ECB's Lagarde told ministers that the ECB plans to put a limit on bond spread, and that the tool would address irrational market moves.
The sources report goes into some more detail on possible triggers for the policy:
- "the European Central Bank’s new anti-crisis tool will kick in if the borrowing costs for weaker nation rise too far or too fast"
- "new mechanism that central bank officials are devising is intended to prevent irrational market movements from putting pressure on individual euro nations "
- "She said the instrument may be triggered if bond spreads widen beyond certain thresholds or if market movements exceed a certain speed. Lagarde did not specify whether those limits would be made public."
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