Turnaround of the ECB: rates on the rise since July and stop on the purchase of securities
Lagarde's announcement: the central bank will stop buying bonds as part of the Pepp program designed to help EU nations cope with the Covid crisis. In September rates up to 0.50%The European Central Bank will interrupt the purchase of government bonds with the Pepp program from 1 July , or the program designed to help EU nations to cope with the crisis generated by the Covid-19 emergency (Pepp is the acronym of Pandemic Emergency Purchase Program).
Also in July, the ECB itself will raise interest rates by 0.25% and for September, President Christine Lagarde has already announced that an increase of up to 0.50% "will be appropriate" if "inflation prospects in the medium term remain so or will deteriorate ".
Lagarde herself, during a press conference from Amsterdam, hypothesized possible reinvestments of the Pepp program in an anti-spread function and - she added - "if necessary we are ready to deploy an adjustment of existing instruments, or new ones".
The turning point of the ECB, more "harder" than expected, has naturally triggered reactions on the financial markets.
Strong tension especially on government bonds : the ten-year BTP yield rises above 3.5%, with the spread at 214 points , the highest for over a year.
The stock markets fell, with Piazza Affari at -1.6%, the worst in Europe .
(Unioneonline / lf)
