ECB Governing Council member Peter Kazimir said the rise in Eurozone bond yields this year wasn’t dramatic for now”. The decision last week to significantly increase asset purchase in Q2 was “a reaction to the spillover of the market move triggered by the approval of the U.S. fiscal package.”
“My concern is that, compared with the enormous U.S. fiscal impulse, the effects of the European one will kick in with a major delay — we’re talking months and years,” Kazimir said. “The joint fiscal reaction is lagging behind and needs to pick up its pace to support the recovery.”
Also, Kazimir didn’t expect the need to keep downward pressure on bond yields forever. “With a gradual economic revival, and with generally improving situation, the market rates will naturally react,” he said. “What’s important is that such an increase reflects economic fundamentals and that there aren’t some speculative, unwarranted moves.”
Separately, Executive Board member France Elderson said in a Twitter Q&A: “Inflation increased sharply in January and February, and is likely to go up further in the coming months… This is mainly due to transitory factors, which we look through. Underlying inflation remains subdued owing to weak demand and economic slack,”
