ECB’s Rehn calls yield curve control nonsensical for euro area


The European Central Bank (ECB) Governing Council member Olli Rehn dismissed yield curve control as a tool to enhance the financing conditions in the euro area while speaking in an interview on Finland’s YLE TV1.

Key quotes (via Bloomberg)

Yield curve control “would be a rather mechanical approach” to the question of financing conditions, and “not sensible” given the euro area has at least 19 different yield curves.

“The ECB has decided to assess how to define “favorable” financing conditions and what is the best way to determine how those conditions develop.”

“We need certain indicators” to examine “how to retain favorable financing conditions, allowing lending to households and companies to function well.”

“There should be no automation as it’s better to leave enough room for common sense and consideration. In that sense monetary policy is as much an art as it is a science.”

Earlier this week, Bloomberg reported, citing sources, the ECB is actively managing bond yield spreads between the strongest and weakest economies of the bloc. The central bank, however, doesn’t call it yield curve control.

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