The ECB’s decided last week to accelerate bond purchases for the next three months to counter a rise in bond yields, which policymakers deem at least partly unwarranted for an economy still struggling under the COVID-19 pandemic.
“Our objective is basically to make sure the yield curves, which play an important role in determining overall financing conditions, do not move ahead of the economy,” Lane told the Financial Times.
With the ECB in the middle of a strategic review, Lane added there was a “strong logic” in announcing that inflation would be allowed to overshoot the ECB’s 2% target given that it had lagged it for so long, as the U.S. Federal Reserve has done.
But he cautioned there were “other options that may also be successful in anchoring inflation expectations”.
To read the full article, Click Here