The European Central Bank (ECB) is expected to announce a 12-month extension to the most favorable interest rate on the TLTROs by the end of this year, according to Bloomberg Economics.
“The ECB appears to have moved away from relying on its tiering system to reduce the cost to banks of excess reserves and is depending more on the interest rate of its targeted longer-term refinancing operations.”
“The change would significantly reduce the pain to bank profits from the negative deposit rate and do away with the need for the tiering multiplier to be adjusted.”
On Monday, ECB President Christine Lagarde said that they are “closely monitoring” the market for government bonds, hinting that the central bank may act to prevent the surge in yields.
The 10-year German bond yields rebound 5 bps to -0.30% on Tuesday, reversing almost the entire drop triggered by Lagarde’s comments.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.