SEOUL (MNI) – A “brutal reassessment” of sovereign risk by the
markets has forced the Eurosystem into taking measures designed to ease
market funding activity and avoid any knock-on effects on the real
economy, Bank of France governor Christian Noyer said Tuesday
“The euro-area has been at the epicenter of this phenomenon. Some
market segments have become dysfunctional to a point that jeopardized
the transmission of monetary policy,” he told a Bank of Korea
conference here.
“The Eurosystem has therefore resorted to new steps to contain
those tensions and prevent their spillover to the real economy.”
Noyer also said that the European Central Bank has managed to
respond to the crisis of recent years without unhinging inflationary
expectations.
“At no time during the crisis have inflation expectations
significantly deviated from our definition of price stability,” he said,
noting that those expectations remain “strongly anchored” at around 2%.
“The ‘zero lower bound’ never really was a problem,” he said.
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