FT: ECB to firm up plans to ward off bond market stress
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FT: ECB to firm up plans to ward off bond market stress

Council members likely to commit to counter any turmoil triggered by higher rates
The Euronext stock exchange in Amsterdam
The Euronext stock exchange in Amsterdam. ECB policymakers will meet in the city this week to outline plans to counter bond market turmoil © Peter Boer/Bloomberg

The European Central Bank is this week set to strengthen its commitment to prop up vulnerable eurozone countries’ debt markets if they are hit by a sell-off, as policymakers prepare to raise rates for the first time in more than a decade. The bulk of the 25 governing council members are expected to support a proposal to create a new bond-buying programme if needed to counter borrowing costs for member states, such as Italy, spiralling out of control, according to several people involved in the discussions. Even without a new scheme, the ECB already has an additional €200bn to spend on purchasing stressed government debt under its existing bond-buying programme. That €200bn would come from bringing forward reinvestments of maturing assets by up to a year. Italian government debt rallied on Monday morning, pushing the yield on the country’s benchmark 10-year bond down as much as 0.1 percentage points to 3.3 per cent.


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