MNI BRIEF: EU Borrowing Not Only Path To Growth, ECB's Muller

The role of rising long-term sovereign bond yields on both the euro area's economic recovery from the Covid-19 pandemic and European Central Bank monetary policy decisions should not be overestimated, the governor of the Central Bank of Estonia said in a speech published for the first time in English.

Bond yields are just "one indicator among many" the Governing Council follow when assessing financing conditions and access to finance, Madis Muller said, adding that low interest rates will not bring Europe out of the crisis unless accompanied by structural reform and sound government investment of borrowed money.

The sustainability of such additional debt "is not currently a problem given the low interest rates, but it must be remembered that interest rates will rise in the longer term," Muller said, underlining the emerging divide between hawks and doves over the future of the ECB's pandemic emergency purchase programme.