The European Central Bank (ECB) said today it will shield weaker eurozone economies from soaring interest rates after it convened an emergency meeting to plot how to deal with debt market volatility.
The monetary authority governing the group of countries using the euro summoned its experts in response to market pressure that saw Italy’s 10-year bond reaching around 4.2 per cent, the highest level in nearly a decade.
The ECB said it will create a new tool aimed at reducing the impact of higher borrowing costs on European countries with weaker financial positions, such as Italy and Spain.
Unlike the Bank of England and the US Federal Reserve, the ECB manages several different countries’ money, each of which have varying degrees of economic strength.
Consequently, president Christine Lagarde and co’s rate and bond buying decisions exert varying degrees of influence across the Continent.
Lagarde confirmed last week the ECB would raise rates for the first time in over a decade next month.