LONDON, July 18 (Reuters) - The euro and government bond yields in the single currency bloc fell on Thursday, following a report by Bloomberg News that European Central Bank staff are studying a potential revamp of the bank’s near 2% inflation goal.
The report quoted sources as saying ECB staff are informally studying the bank’s policy approach, including whether the current inflation target is still appropriate in the post-crisis era.
Analysts said the report fuelled market speculation of interest rate cuts from the ECB.
“If it were to happen then it would mean that the ECB would have to have rates lower for longer,” said Peter Chatwell, head of rates strategy at Mizuho. “Prices have clearly moved on that story but it is a knee-jerk reaction.”
The euro fell to the day’s lows of $1.1205, down 0.13% on the day. The single currency was up as much as 0.1% before the news report at $1.1240.
Euro area bond yields extended their falls with Germany’s benchmark 10-year Bund yield last down 2.5 basis points on the day at minus 0.36%.
The benchmark euro zone equity index hit its high for the day at 379 points at 1030 GMT versus around 376 points before the headline. It was down 0.2% at 1122 GMT. (Reporting by the London Markets Team; editing by Sujata Rao)