The European Central Bank (ECB) has been monitoring the recent surge in government bond yields but will not try to control the yield curve, ECB chief economist Philip Lane said on Friday.
Bond yields, particularly over the past week, have been partly driven by rising U.S. treasury yields.
Lane, speaking to a Spanish newspaper, said that the effects of the economic contraction were less than last year and that the central bank expected the Covid-19 pandemic to recover by the end of this year.
When asked about concerns over rising inflation, Lane said that, what is seen now is not a significant and continuous change in inflation.
In fact, he sees rising inflation is actually good news, as this shows the scenario of the world economy heading towards recovery.
At this stage, the reduction in excess revenue will be inconsistent with combating the pandemic shock towards inflation, so the central bank will continue to monitor day-to-day yield increases.
All questions about inflation will be the main focus of the central bank, especially when the ECB has new forecasts on inflation. However, it should be noted that the pandemic emergency purchasing program (PEPP) will be used flexibly in response to market conditions, he added.
