New bonds: can the ECB calm jittery markets?
The ECB's Governing Council has held an emergency meeting just one week after announcing an interest rate hike. The monetary watchdog is concerned about the rise in yields on government bonds which followed the announcement and which poses a problem for highly indebted countries like Italy. Among other measures, the ECB plans to help these countries by reinvesting redemptions from maturing bonds.
Acting together this time
Público welcomes the ECB's decision:
“The war in Ukraine, soaring inflation and the signs of economic stagnation that are accumulating in Portugal and Europe are becoming a threat to the stability of the Eurozone and the living conditions of its inhabitants. Dealing with this threat has become a priority in the policies of the ECB, the EU Commission and the member states. Moreover, unlike in the last debt crisis, the European authorities are now committed to providing integrated responses to the crisis and are not willing to let suspicions about the vulnerability of Greece, Italy or Portugal grow.”
Not enough resolve
For El País the measures are too half-hearted:
“The ECB's emergency meeting and the subsequent announcements have lowered the pressure on risk premiums, but only slightly, to last week's level. Frankfurt will have to work harder. If Wednesday's announcements had been given a more solemn emphasis, comparable to Mario Draghi's determined stance during the euro crisis in 2012, they would have had a greater impact. And if the creation of the new anti-fragmentation mechanism had been presented in a clearer, less ad hoc way, there would be less doubt that it's not worthwhile for speculators to take risks.”
Markets easily reassured
The measures announced by the ECB are hardly mind-blowing, Postimees observes:
“The emergency meeting of the ECB Governing Council ended with the news that the institution will 'show flexibility' to keep countries' borrowing costs under control. In addition, the promise was repeated that a new instrument would be created for this purpose. So a little hot air, but this was apparently enough for the financial markets. At the beginning of this week, the price of borrowing money rose to 4 percent for Italy, while for Germany it was 1.7 percent. The difference grew rapidly after the ECB meeting last week, but now it has narrowed again.”