ECB steps up response to crisis with bond proposal

ECB president Mario Draghi said it may wade forcefully into bond markets in tandem with Europe’s rescue fund, stepping up its crisis response despite the reservations of Germany’s Bundesbank.

“The euro is irreversible,” Mr Draghi said at a press conference in Frankfurt yesterday after keeping the benchmark interest rate at 0.75%.

Elevated bond yields “that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner”, he said. The ECB may therefore “undertake outright open market operations of a size adequate to reach its objective”.