FRANKFURT (MNI) – A hard cap on sovereign bond yields set by the
European Central Bank is “very unlikely” to be part of the ECB’s new
bond buying program, German daily newspaper Frankfurter Allgemeine
Zeitung quoted a central bank official as saying in an article on
Wednesday.
Still, the possibility of a yield cap has not been ruled out, the
central bank official told the paper. Among the certain elements is that
any sovereign bond buys will continue to be sterilized, as with the
current SMP program, FAZ reported.
MNI’s ECB Sources story from last week also said the ECB was
unlikely to target a maximum level for peripheral bond yields, with one
senior Eurosystem official calling them “very dangerous.”
Rather than setting any explicit target, which could tie the ECB’s
hands, the central bank might consider conducting massive short-term
interventions in order to hit speculators hard and stop “panic pricing,”
this official suggested.
ECB President Mario Draghi is set to unveil details of the new bond
buy program at his press conference after the Governing Council meeting
Thursday.
— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —
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