Draghi: The ECB Won't Buy Bonds With Yields Lower Than Deposit Rate

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European Central Bank President Mario Draghi said at a news conference on Thursday the ECB is willing to buy government bonds with negative yields, but only "down to the deposit rate" at the ECB, which is negative 0.2%. At the bank's Jan. 22 meeting, Draghi indicated that the ECB was willing to buy debt with negative yields, but it was unclear how low they would go. Borrowing costs across most of the eurozone have moved sharply lower since the central bank's QE announcement in January, with 10-year bond yields in Italy and Spain moving to record lows, and shorter-dated German yields sliding into negative. Yields continued their march lower after Draghi's comments on Thursday, with 10-year Italian borrowing costs down 7 basis points to 1.325%, and German 10-year bund yields down 1 basis point to 0.365%.

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