ECB Monthly Bulletin now published 21 June
- risks diminished but tilted to downside
- Chinese vulnerability over medium term remain elevated
On the QE programme:
- 55% of corp bonds are German or French
- 12% of CSPP bonds have been bought at negative yields but above depo rate.
Says:
Risks of an abrupt shift in global financial conditions appear to have eased but not disappeared. Since the "taper tantrum" episode in 2013, when expectations regarding US monetary policy shifted abruptly, a combination of careful communication and a very gradual approach to monetary tightening by the US Federal Reserve System appears to have mitigated such risks somewhat.
In particular, the gap between market expectations and Federal Open Market Committee (FOMC) projections regarding interest rates has narrowed (see Chart A), suggesting that the prospect of monetary policy surprises has diminished. However, uncertainty about the tightening cycle in the United States remains and, despite the modest rebound in the term premium since mid-2016, longer-term interest rates remain very low.
Full bulletin here.
ECB sees global risks to downside still
