FRANKFURT (Reuters) – The European Central Bank (ECB) will not activate its new Transmission Protection Instrument (IPT) anti-fragmentation tool to ease member states’ borrowing costs if they spike due to domestic policy mistakes, Christine Lagarde said on Monday.
The President of the ECB believes that assistance would be more appropriate via the Outright Monetary Transactions (OMT) program, which allows the central bank to directly buy sovereign debt of a given country in return supervision of its economic policy.
Christine Lagarde also said that additional measures may be necessary if inflation does not fall back to around 2% when interest rates have reached the so-called “neutral” level, the one that neither stimulates nor slows down the economy. .
(Report Francesco Canepa; French version Claude Chendjou, edited by Bertrand Boucey)
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