Post a Comment Print Share on Facebook

The Bank of France suggests that the rate rise is near and shakes the bond market

Villeroy announces that the rise will come "quarters after" the end of the purchase of debt

- 44 reads.

The Bank of France suggests that the rate rise is near and shakes the bond market

The monetary stimulus in which eurozone is not going to be withdrawn little by little. And, after a reasonable time, interest rates will rise again. These are only certainties on forthcoming decisions of European Central Bank (ECB). Doubts arise around everything else: that is, how and when this process will occur. But governor of Bank of France and, refore, a member of Eurobanco General Council, has just given some clues about next steps of monetary authority.

More information
  • Hold! Turbulence is looming
  • The Fed keeps guys but sees inflation closer to target
  • Mario Draghi warns that pace of growth is moderated in eurozone

Rate hikes will come quarters after end of massive debt-buying program, which has already reached gigantic volume of 2.37 trillion euros, slightly more than double Spanish GDP. The decision on purpose of what in USA was known as Quantitative Easing and in Europe adopted name of asset purchases program is scheduled for September or December of this year. That in end occurs in one or anor month "is not an existential issue," said Villeroy, one of names that sound as possible replacement of ECB president, Mario Draghi, in October of next year, when he exhausted his mandate.

Villeroy's comments are not a big surprise, but y do add data to a road that has already walked US Federal reserve. In any case, discourse had an undeniable effect on markets. The performance of German 10-year bond experienced its highest rise in a month. France and Belgium debt securities were also rebounded in secondary market. "The effect of ECB's purchase of assets is reaching its peak. We detected a high upward pressure on global public debt yields, "told Reuters agency Paul O'Connor, analyst at Janus Henderson Fund. The euro was revalued up to 1.196 dollars. And most of European stock exchanges, including Hispaniola, closed downwards.

Inflation is one of key indicators in which ECB must set itself to make decisions over next few months. It matters, above all, to what extent it approaches goal of staying close, but below 2%. Villeroy devalued April data, which recorded a slight descent to 1.2%. "We believe that this is temporary and we expect inflation to continue its progress in coming months," he added. After closing at 1.5% last year, Eurobanco foresees that in 2020 is at 1.7%, according to Villeroy himself.


You have to login for comment. If you are not a member? Register now.

Login Sign Up