Draghi Tried to Be Cautious But Spooked the Market Anyway
- Euro and bond yields whipsawed amid conflicting ECB signals
- Officials said to see reaction as sign of hypersensitivity
Draghi Urges Persistence in Stimulus, Prudence Needed
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Mario Draghi just got evidence that his call for “prudence” in withdrawing European Central Bank stimulus applies to his words too.
The euro and bond yields surged on Tuesday after the ECB president said the reflation of the euro-area economy creates room to pull back unconventional measures without tightening the stance. Policy makers noted the jolt that showed how hypersensitive investors are to statements that can be read as even mildly hawkish, according to three Eurosystem officials familiar with their thinking.