Hollande backs bond buying as he visits Spanish Prime Minister

Ben Southwood
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FRENCH President Francois Hollande yesterday added his support to suggestions that the EU could buy bonds from its struggling member countries, as he made his first visit to Spain since taking power.

“When you see such wide gaps in yields, that could be a justification for an intervention in the name of monetary policy,” Hollande said during a joint press conference with the embattled country’s Prime Minister Mariano Rajoy.

“The ECB’s mandate include[s] price stability and monetary policy,” he said, implying that high borrowing costs for periphery countries may justify bond market intervention by the European Central Bank.

Hollande has at times appeared to side with Germany, stressing the need for recipient nations to enact their agreed structural reforms.

Rajoy and Hollande met as inflation in Spain jumped to 2.7 per cent, driven by higher fuel costs.

Rajoy has insisted he will not ask for any further help from the EU, to add to a bailout of Spanish banks worth up to €100bn, until the ECB’s strategy is clear.