Lax budgets may push up rates
European bond markets had a little tizzy last week after EU finance ministers decided to change the terms of the stability and growth pact.
European bond markets had a little tizzy last week after EU finance ministers decided to change the terms of the stability and growth pact. Long yields rose – though not spectacularly – and economists forecast that the move would inevitably hasten an increase in EU interest rates.
The theory was that fiscal laxity would lead to monetary tightening. Two things are likely to determine the reaction of the ECB in the months ahead. One is...
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