Is the recent increase in long-term interest rates a threat to the euro-area recovery?

Please note: Each In-Depth Analysis is assigned a DOI (digital object identifier), which is a safe and long term way of ensuring a hyperlink to the full text of this report. However, when ESO creates this record, on occasion the DOI still has not been activated by the EU Bookshop. If you find the source url hyperlink does not work please use the alternative location hyperlink listed as a related url.The magnitude of the increase in long-term rates is still relatively modest and is mainly driven by good news. It does not represent a strong tightening of financial conditions, nor does it endanger public finances. The ECB should monitor the situation carefully but it should not be a major concern for the moment. Nevertheless, if in the future yields drift away from levels compatible with economic fundamentals, or threaten the European recovery and the return of inflation towards 2%, the ECB’s expanded toolbox could be used to influence the whole yield curve.

• Primary Source

European Parliament: European Parliamentary Research Service: In-Depth Analysis, May 2017: Is the recent increase in long-term interest rates a threat to the euro-area recovery? http://www.europarl.europa.eu/RegData/etudes/IDAN/2017/602047/IPOL_IDA(2017)602047_EN.pdf

---