European Central Bank Governing Council member Luis Maria Linde said negative yields on Spanish debt probably won’t persist as the recovery continues.
“If the economy normalizes, in the sense that the American recovery is confirmed and interest rates go up in the U.S. -- and also the recovery in Europe, the monetary union -- my impression is that the negative interest rates aren’t going to last long,” Linde said in an interview with Bloomberg on Friday in Granada, Spain.
The comments from Linde, who is also Bank of Spain governor, come three days after the government borrowed money for the first time at interest rates below zero.
Yields across the currency bloc have fallen this year, pushed lower by the ECB’s quantitative-easing stimulus program. While sovereign-bond purchases only started last month, the initiative was announced in January, and ECB policy makers have said the plan started to have an impact at that time.
“Two months from starting, in principle, the impact is positive,” Linde said. “And one has to judge by the evolution of interest rates and the impact in the markets, the impact has been good.”
He also indicated the ECB’s latest stimulus measures have reduced concern about deflation in the euro area, where prices have been falling on an annual basis for the past four months. The drop eased to 0.1 percent last month from 0.3 percent in February and 0.6 percent in January.
The ECB aims to keep inflation just below 2 percent. “I think that perhaps to say now that there is no deflation risk is easier to say than two months ago,” Linde said. “Two or three months ago there wasn’t this feeling. There was a feeling that there was a risk of deflation.”
bloomberg.com
“If the economy normalizes, in the sense that the American recovery is confirmed and interest rates go up in the U.S. -- and also the recovery in Europe, the monetary union -- my impression is that the negative interest rates aren’t going to last long,” Linde said in an interview with Bloomberg on Friday in Granada, Spain.
The comments from Linde, who is also Bank of Spain governor, come three days after the government borrowed money for the first time at interest rates below zero.
Yields across the currency bloc have fallen this year, pushed lower by the ECB’s quantitative-easing stimulus program. While sovereign-bond purchases only started last month, the initiative was announced in January, and ECB policy makers have said the plan started to have an impact at that time.
“Two months from starting, in principle, the impact is positive,” Linde said. “And one has to judge by the evolution of interest rates and the impact in the markets, the impact has been good.”
He also indicated the ECB’s latest stimulus measures have reduced concern about deflation in the euro area, where prices have been falling on an annual basis for the past four months. The drop eased to 0.1 percent last month from 0.3 percent in February and 0.6 percent in January.
The ECB aims to keep inflation just below 2 percent. “I think that perhaps to say now that there is no deflation risk is easier to say than two months ago,” Linde said. “Two or three months ago there wasn’t this feeling. There was a feeling that there was a risk of deflation.”
bloomberg.com
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