ECB's Panetta: Must establish that unwarranted tightening will not be tolerated

Comments from Panetta

• We must establish the credibility of our strategy by demonstrating that unwarranted tightening will not be tolerated
• A steeper yield curve must be resisted
• We should not hesitate to increase the volume of purchases and to spending the entire PEPP envelope or more if needed
• Inflation increase only temporary
• The near-term growth outlook is also skewed downward
• Eventually, firm commitment to steering the eurozone yield curve may allow us to slow the pace of our purchases
• Temptation for less monetary policy accommodation must be resisted

It doesn't get any more equivocal (or dovish) than this. We heard something similar but not as strong from Villeroy yesterday. The ECB isn't having any of this rise in yields.

What's wild is that he's talking about even more QE at a time when German bunds are yielding -0.32%.

The euro is down 24 pips to 1.2025 and I'm increasingly of the belief that US-eurozone spreads will widen. Eventually that's going to drag down EUR/USD.

Here's the full quote:

"The steepening in the nominal GDP-weighted yield curve we have been seeing is unwelcome and must be resisted. We should not hesitate to increase the volume of purchases and to spend the entire PEPP envelope or more if needed."