Reply #65: ECB pledges further action if needed

[Ghost Dog]

http://www.ft.com/cms/s/0/370f2db0-5bb6-11dc-bc97-0000779fd2ac.html

The European Central Bank announced on Wednesday that it is ready to intervene again to relieve tension in financial markets, the day before its governing council meets to discuss interest rate policy.

The ECB’s pledge to launch a fresh liquidity-boosting operation on Thursday if necessary, followed sharp rises in overnight interest rates and an earlier attempt by the Bank of England to calm financial market pressures. Euro overnight interest rates had earlier hit 4.685 per cent, almost as high as on August 9 when the ECB injected an unprecended €94.8bn into money markets.

In a statement, the ECB said that volatility in the euro money market had increased that it was “closely monitoring” the situation. It went on: “Should this persist tomorrow, the ECB stands ready to contribute to orderly conditions in the euro money market.”

Its action undermined the ECB's recent claims that conditions in money markets were normalising.

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