ECB head defends decision to buy eurobonds
European Central Bank chief Jean-Claude Trichet on Monday defended his decision to buy eurozone debt in order to shore up the Italian and Spanish economies and calm plunging equity markets.
"For reasons of monetary policy we are able to take exceptional measures," Trichet told German public television ARD.
"Among these measures is the buying of state debt at a time when the markets are so shaken that our monetary policy would not otherwise have the impact," he added in the short interview.
The European Central Bank announced action late Sunday to buy Italian and Spanish bonds through the secondary market, and promises of further budget cuts in Rome and Madrid.
While the ECB did not openly name the countries it was helping out the markets were clear where the focus was, nor the size of its intervention.
"ECB intervention this morning has been taken as a positive move with Italian and Spanish 10-year bond yields having seen a sharp drop now standing around 5.3 percent and 5.2 percent, compared to levels above 6 percent last week," said Investec economist Victoria Cadman.
Up to Monday the ECB had bought up 77 billion euros ($109 billion) of public debt, a role it reluctantly agreed to adopt in the spring of 2010, at the time to help heavily indebted Greece.
© 2011 AFP