Remarks by ECB executive board member, Isabel Schnabel

  • Changes in nominal rates have to be monitored closely
  • If a rise in nominal yields reflect inflation expectations, it is a welcome sign
  • But rise in real long-term rates may hurt the recovery
  • Policy will then have to step up its level of support
  • Full speech

That is a stronger warning as compared to what we have heard from Lagarde and Lane earlier in the week on just "monitoring" the rise in yields. As mentioned earlier, watch for the invisible hand as central banks start to feel that their credibility is threatened.