VIENNA (Reuters) - The European Central Bank will intervene in government bond markets if needed, ECB policymaker Robert Holzmann said on Monday, as Governing Council members seek to reassure markets it will act to help countries tackle the impact of coronavirus.
The ECB has been engaged in a concerted rearguard action since President Christine Lagarde upset investors and fellow policymakers on Thursday by saying it was not the bank’s job to help virus-stricken countries such as Italy on the debt market.
“If there is a need to intervene in the area of government bonds, measures will be taken,” Austrian central bank chief Holzmann told a news conference in Vienna.
Italian board member Fabio Panetta said in an interview published on Sunday that the euro zone’s central bank was ready to rein in “unjustified” spreads between member countries’ euro zone bond yields and even beef up its debt purchases.
The ECB provided fresh stimulus on Thursday to support the euro zone economy as the pandemic hits activity and joined other major central banks on Sunday in offering cheap U.S. dollars in a bid to prevent global lending markets seizing up.
The U.S. Federal Reserve also cut its key rate to near zero on Sunday in a move reminiscent of the steps taken just over a decade ago in the wake of the financial crisis.
Other central banks are also pulling out the stops to prevent a global recession as coronavirus paralyses economies.
The ECB has said it will buy an extra 120 billion euros ($133 billion) worth of bonds by the end of the year in response to the pandemic, on top of the 20 billion euros it buys every month to support inflation in the euro zone.
Reporting by Kirsti Knolle; Editing by Thomas Seythal and Catherine Evans