Lagarde: ECB Closely Monitoring Bond Yields

President of the European Central Bank (ECB) Christine Lagarde told the European Parliament on Monday that the bank is closely watching bond yields to assess financing conditions in the Eurozone and economic recovery from the Coronavirus crisis, Bloomberg reported.

“Within the broad-based set of indicators that we monitor to assess whether financing conditions are still favorable, risk-free overnight indexed swap rates and sovereign yields are particularly important.”

“Banks use those yields as a reference when setting the price of their loans to households and firms,” she said in a speech on Monday. “Accordingly, the ECB is closely monitoring the evolution of longer-term nominal bond yields.”

Following remarks by Lagarde, European treasury bond yields continued to decline, as the German 30-year bond yields fell by 5 basis points to 0.16%.