ECB chief economist Philip Lane said in a speech, “ensuring favourable financing conditions is central to restoring inflation momentum and guiding the formation of inflation expectations”. And, “preservation of favourable financing conditions should involve the inspection of indicators along the whole transmission chain of our monetary policy”.
Within the broad-based set of indicators, “the downstream conditions facing the households and firms that rely on bank-based credit play a prominent role,” he said”. “Upstream indicators of risk-free OIS rates and sovereign yields are particularly important”.
Accordingly, “the ECB is closely monitoring the evolution of longer-term nominal bond yields,” Lane added.
