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
- 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.