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04 Jul, 2022 17:11

Bundesbank chief warns against using ECB's tools to contain wider spreads

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Bundestag from insideDom Crossley Flickr ( https://creativecommons.org/licenses/by-nd/2.0/ ) No changes made

The head of Germany's central bank urged caution on using policy tools to limit the borrowing costs of weaker economies within the single-currency bloc.

In a virtual speech to an audience in Frankfurt, Joachim Nagel, said such tools should only be used under "exceptional" circumstances and narrowly defined conditions.

That was in part because it was "virtually impossible" to know whether bigger risk premia on some sovereign debt were justified or not.

"One can easily find oneself in dire straits," he added, according to Bloomberg.

During the same speech, Nagel also indicated that the European Central Bank's inflation outlook could "quite possibly" need to be revised higher again in its next round of forecasts due out in September.

Hence, barring improvement, "a more sizable interest rate hike would be completely appropriate" Nagel said, including, ultimately, a "restrictive" policy.


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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author or publisher.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.

The value of investments can fall and you may get back less than you invested.