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5/16/2017, 9:12 PM (Source: TeleTrader)
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Coeure: Euro yield jump didn't upset ECB

Effective communication and forward guidance by policymakers in the Eurozone will prevent the strategic measures from increasing instability in the capital markets, while the recent steepening of the yield curve isn't causing concern per se, said Benoit Coeure from the European Central Bank. The board member told the Bond Market Contact Group in Frankfurt on Monday that it didn't affect the stance of his peers.

The ECB's official cited the rise in long-term yields since September and mentioned the presidential election in the United States. The switch in the trend coincided with concern over a rise in populism, including elections in the Netherlands and France. "If the increase reflects a repricing based on better current or prospective economic conditions, this would not be a source of concern for policymakers. However, if it were induced by markets overreacting to news or misunderstanding our policy intentions, this increase would be undesirable from a policy perspective," he said.

The rate-setter acknowledged that when the basic levels are closer to neutral, central bankers are less effective in influencing the short end of the curve and expectations. But, in Coeure's words, negative deposit facility rates, introduced three years ago, "restored" the ability.

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