The ECB announced a series of rate hikes on Thursday. Since then, bond yields have risen sharply.
(Photo: dpa)
Frankfurt The monetary authorities of the European Central Bank (ECB) are holding an extraordinary council meeting this Wednesday to discuss the consequences of the recent sell-off in the bond market. “The Governing Council will hold an ad hoc meeting on Wednesday to discuss current market conditions,” a spokesman for the euro central bank said on Wednesday. No further details were given.
The ECB announced a series of rate hikes on Thursday. Since then, bond yields have risen sharply. The yield difference (spread) between German government bonds and those of more heavily indebted southern euro countries, especially Italy, had risen to its highest level in over two years.
The interest rate on a Greek government bond with a ten-year term is now 4.7 percent, the spread (interest rate difference to the German counterpart) is 395 basis points. This creates a dilemma for the ECB. On the one hand, it has to fight inflation. On the other hand, she has to see what high interest rates she can expect from heavily indebted countries like Greece.