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Brussels blog by some wire service journalists

ECB pledge gets Spain, Italy rates down

 

By DAVE McHUGH and GABRIELE STEINHAUSER

FRANKFURT, Germany — A risky European Central Bank decision to fight the continent’s debt crisis by buying Spanish and Italian bonds on Monday started pushing down the soaring interest rates threatening those countries with financial disaster.

But some analysts cautioned that buying up the bonds of deeply indebted governments transfers significant risk to the balance sheet of an institution long reluctant to move beyond its traditional role controlling inflation.

Others expressed fears that the ECB could end its bond-buying too soon, leading rates to rise again. Bond yields and prices move in opposite directions; purchases that drive up the price also reduces the interest rate countries face on new bonds.

READ THE FULL STORY HERE.

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