Schnabel Hints At Anti-Frag Tool, But Details Still Sparse (2)

Speaking today at Panthéon-Sorbonne University on euro area bond market fragmentation, Isabel Schnabel stated:

• "...some borrowers have seen significantly larger changes in financing conditions than others since the start of the year. Such changes in financing conditions may constitute an impairment in the transmission of monetary policy that requires close monitoring."
• "In December of last year, we made clear that we would not tolerate price adjustments that would undermine the transmission of our monetary policy."
• "While the flexible allocation of PEPP reinvestments is one way to address fragmentation, our commitment is stronger than any specific instrument. Our commitment to the euro is our anti-fragmentation tool. This commitment has no limits. And our track record of stepping in when needed backs up this commitment."
• "We will react to new emergencies with existing and potentially new tools. These tools might again look different, with different conditions, duration and safeguards to remain firmly within our mandate. But there can be no doubt that, if and when needed, we can and will design and deploy new instruments to secure monetary policy transmission and hence our primary mandate of price stability."