ECB pledge to defend inflation boosts bonds

London - Eurozone government bonds rose after European Central Bank executive board member Peter Praet said policy makers would “forcefully react” to defend their inflation objective.

Italian securities led gains across the region as Praet said in a speech in Geneva the ECB will “certainly do what’s necessary.” Since the ECB started its €1.1trn asset-purchase program in March, inflation in the currency bloc has slowed to a near standstill.

It remains far less than the ECB’s goal of just below 2%, with consumer prices rising 0.1% in August from a year earlier.

Italy’s 10-year bond yield fell three basis points to 1.78% at 09:44. The 1.5% security due in June 2025 rose €2.30 per €1 000 face amount, to 97.59.

The yield on similar-maturity Spanish bonds declined one basis point to 1.99%. Benchmark German 10-year bund yields slipped two basis points to 0.66%.