Lagarde Says ECB 'Closely Monitoring' Bond Yields

The transcript discusses the preservation of favorable financing conditions during the pandemic, emphasizing the importance of monitoring various indicators in the monetary policy transmission chain. It highlights the role of risk-free rates and sovereign yields as early indicators for banks setting loan prices. The ECB's monitoring of nominal bond yields is crucial, and the overall policy mix, along with national measures, is essential for firms and households to benefit fully from these conditions.

What is the primary focus of the ECB's commitment during the pandemic?

• Eliminating risk-free rates

• Reducing bank lending to households

• Maintaining favorable financing conditions

• Increasing government borrowing costs

Why are risk-free rates and sovereign yields important in monetary policy?

• They reduce the need for national policy measures

• They increase government borrowing costs

• They determine the inflation rate

• They are used to set loan prices by banks

How do banks utilize sovereign yields in their operations?

• To eliminate risk-free rates

• To increase their interest rates

• To set the price of their loans

• To decrease their lending activities

What is essential for firms and households to benefit from favorable financing conditions?

• National policy measures

• Reduced government borrowing

• Increased inflation rates

• Higher interest rates

What role does the overall policy mix play during the pandemic?

• It reduces the need for monetary policy

• It is essential for maximizing monetary policy's potential

• It eliminates the need for national measures

• It increases the cost of borrowing