ECB monitors the rise of borrowing costs as seen in the persisting uptrend in bund yields but won’t engage in yield curve control, said ECB chief economist Philip Lane on Friday in an interview with a Spanish newspaper.

The yield on EU government bonds rose substantially following a jump in the US Treasury bonds yields. Comments from senior ECB officials, including Christine Lagarde, failed to dampen the rally.

At this stage, excessive yield caps would be incompatible with fighting a pandemic shock along the inflationary path," Lane told Expansión. "But at the same time, it is very clear that we are not exercising control over the yield curve, in the sense that we do not seek to peg interest rates", he added.

The yield on Germany's 10-year government bonds climbed to -0.223%, up from -0.60% at the beginning of the year.

Lane added that inflation gradually recovers, but is far from what the regulator is aiming for after falling short of target for the last decade.

Lane said that the recovery of the bloc's economy after decline caused by the pandemic will occur in the 2Q, and the negative impact of the current lockdowns will be less than a year ago.

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