ECB Focuses on Price Stability, Not Targeting Bond Spreads
European Central Bank policymaker Joachim Nagel stated that the ECB's debt-buying tools are designed to maintain price stability, not target specific sovereign bond spreads. This comes as a selloff in French government debt has sparked speculation about possible intervention.
Nagel said that the Transmission Protection Instrument (TPI) is meant to safeguard price stability, and added that he does not comment on individual country's spread levels. He mentioned several other tools available for the ECB, but emphasized their focus on price stability rather than specific bond spreads.
The spread between French and German government bond yields has widened to 132.86 basis points, its highest level since the euro zone debt crisis in 2012. This increase is attributed to concerns over inflation risks, political and fiscal uncertainty, as well as higher term premia.