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The European Central Bank (ECB) Executive Board Member, Isabel Schnabel crossed the wires in the last hour, saying that gradual increases in real yields may not necessarily be a cause of concern.3

Key Quotes:

  • If a rise in nominal yields reflects an increase in inflation expectations is a welcome sign.
  • Changes in nominal rates have to be monitored closely.
  • A rise in real long-term rates at the early stages of the recovery may withdraw vital policy support too early and too abruptly.
  • Risks of moral hazard should not condemn the central bank to a course of inaction.
  • ECB may need to add support if yields hurt growth.
  • ECB still has some room to cut interest rates.

The comments did little to influence the shared currency or provide an impetus to the EUR/USD pair, which was last seen trading with modest losses around mid-1.2100s.

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