The ECB needs to stick to its already laid out policy path, several policymakers argued on Thursday, as they rallied together after small guidance tweaks upset investors and raised the spectre of surging borrowing costs for the bloc's indebted periphery. David Pollard reports.
One by one they spoke - on a mission, it appears, to wrestle bond yields down again. First ECB chief economist Peter Praet. Inflation dynamics 'still reliant' on 'very substantial' monetary accommodation, he said. Fellow policymaker Ewald Nowotny talking of 'no need' to deviate. And their peer Erkki Liikanen - also giving his support for the ECB's policy path. On March 9th Mario Draghi warned ultra-loose monetary policy was still needed. But also seemed to hint at less urgency for action in the future. Amid German opposition to the ECB's QE programme, other policymakers appeared to endorse that view. Bond yields surging as markets began pricing in a rate hike early next year. Leaving some hyper-critical of what they saw as a confused message. SOUNDBITE (English) THINK MARKETS, CHIEF MARKET ANALYST, NAEEM ASLAM, SAYING: "You cannot come in March and then do some tweaks which perhaps gives a perception to the market and that instigate a different sentiment in the market which is that the ECB is on the path of what I called it, dovish tapering." Any hint of a slowdown in the ECB's 2.3 trillion euros QE programme something the euro zone recovery could take badly too. SOUNDBITE (English) THINK MARKETS, CHIEF MARKET ANALYST, NAEEM ASLAM, SAYING: "We have a Brexit risk, we have a Greek risk. We have periphery economies which are highly indebted: Italy, Portugal, Spain. A higher yield increases the borrowing costs of these countries." Dutch central bank chief Klaas Knot - who's opposed ECB easing - argued for flexibility in his comments. That seen as dissent - if only minor. The ECB next meets on April 27 - the debate over its policy trajectory far from settled.