ECB executive board member Panetta said the recent surge in bond yields will
weigh on the region's economy but is not yet a critical problem. He called the
moves global and US-led over the past week, with US growth and inflation beating
"The issue is that higher US rates have coincided with stronger expectations.
growth while Europe's growth is relatively weak," he said. Panetta and other ECB
officials warned tighter financial conditions could constrain expansion but may
help rein in inflation that has risen to roughly double target levels after
energy-cost shocks. He said Germany's yields rose less due to stronger public
finances, flagged France's persistently high public debt and deficits, and
warned sovereign stress could push up Italy's borrowing costs. "When US
long-term yields rise, we see spillovers to other markets including Europe," he
added, noting that will affect Italy's financing costs.
