“The spreads of Italian government bonds decreased significantly in the period preceding the formation of a new government by former ECB president Mario Draghi and briefly reached a new multi-year low before returning to growth”. The European Central Bank notes this in the Economic Bulletin. “In particular – it is noted in the publication – during the period under review, the Italian and Portuguese ten-year yield differentials decreased by 12 and 1 basis points, reaching 0.73 and 0.30 per cent, respectively.
Over the same period, German, French and Spanish ten-year spreads slightly increased by 1, 1 and 6 basis points, respectively, to -0.26 per cent, -0.01 per cent and 0.41 per cent. one hundred”.
The Governing Council of the ECB “expects purchases under the pandemic emergency purchase program (PEPP) to be conducted at a significantly higher pace in the next quarter than in the first months of this year. “, reads the ECB Economic Bulletin again. “Market interest rates have increased since the beginning of the year, posing risks for the financing conditions as a whole” – writes the ECB – “if considerable and persistent, the increase in interest rates of if not opposed, the market could result in a premature tightening of financing conditions for all sectors of the economy. Such a development would be undesirable “.
“Uncertainty continues to characterize the short-term economic outlook”, however “looking ahead, the ongoing vaccination campaigns and the gradual easing of containment measures, net of further adverse developments associated with the pandemic, support expectations of a solid recovery in economic activity during 2021 “, Frankfurt reiterates.
“In the medium term, the recovery of the euro area economy should be supported by favorable financing conditions, the expansionary stance of fiscal policies and a recovery in demand as the containment measures gradually disappear”. “The effectiveness of the recovery package will depend on achieving an appropriate balance between investment and mutually reinforcing reforms. To this end, a careful examination of the national plans for recovery and resilience is essential to verify that the evaluation criteria established in the relevant EU regulation are fully respected “, writes the ECB in the Economic Bulletin. “In order to ensure that the funds are used quickly and efficiently for productive public spending – confirms the ECB – particular attention should be paid to strengthening administrative skills and reducing bottlenecks in the implementation phases”
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