ECB Policymakers See No Need to aid Italy with New Scheme

European Central Bank policymakers see no need to step in and buy more Italian government bonds via a new emergency scheme despite a rise in the country's borrowing costs since a right-wing coalition won a general election, sources told Reuters. Analysts have been speculating about whether the ECB would activate its Transmission Protection Instrument (TPI) to stem a rise in Italian bond yields and spreads driven by concerns about public finances under a new government promising lower taxes. But four sources close to ECB decision makers said they saw no need to activate TPI because the market reactions did not appear "disorderly" or "unwarranted" - two key conditions for activating the scheme. They said that investors were reacting to political uncertainty and that the ECB, the central bank for the 19 countries that use the euro currency, would need to see what the new government's policies are before deciding on any intervention. Read more.
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