ECB Executive Board member Isabel Schnabel said, “rising yields are a natural development at a turning point in the recovery – investors become more optimistic, inflation expectations rise and, as a result, nominal yields go up.” “This is precisely what we would expect and what we want to see,” she said. Also, “financing conditions remain favorable.”
“We always have to be willing to reduce or increase asset purchases in line with our promise to keep euro area financing conditions favorable,” she added. “The recovery still depends on continued policy support. A premature withdrawal of either fiscal or monetary support would be a great mistake,”
“It’s likely that when the PEPP ends, we will not have reached our (inflation target),” Schnabel said. “In that case, we will continue to run a highly accommodative monetary policy also after the PEPP.”
