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ECB Focuses on Inflation, Not Bond Spreads, Nagel Says
Nagel said the ECB’s bond tools are for price stability as French yields hit their highest level since 2002, Reuters reported.
On Tuesday, French 10-year bond yields surged to 5.33%, their highest level since 2002, while the spread over German Bunds widened above 140 basis points amid investor panic.
France's national debt is projected to hit a record 119% of GDP this year, intensifying scrutiny of borrowing sustainability amid planned record bond sales and eurozone inflation at 3.8%.
Top economist Mohamed El-Erian warned Monday that "contagion risk is back," as Italian and Greek 10-year yields spiked to 4.74% and 4.57% respectively over the week.
European Central Bank policymaker Joachim Nagel stated Thursday that the bank's debt-buying tools are designed for price stability, not targeting sovereign bond spreads, addressing intervention speculation.
UBS CEO Sergio Ermotti warned Tuesday that resolving France's debt crisis requires "hard measures," while far-right presidential candidate Marine Le Pen called for sweeping spending cuts.
Euro tumbles as French borrowing costs surge due to minority government's budget plan facing massive protests nationwide, while contagion fears grip eurozone bond markets, fueling investor skepticism
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