The euro and European bond yields surged on Friday after Bloomberg reported that the European Central Bank is said to have discussed whether they could raise interest rates before ending their program of monthly asset purchases. The euro was up nearly 0.8% in recent trade at $1.0671, its highest level since Feb. 17. The yield on the German 10-year note , considered the European benchmark, rose five basis points to 0.479%, its highest level since Feb. 1. If true, this would suggest that the central bank is seriously considering a further rollback of its expansionary monetary policy. ECB President Mario Draghi played down such concerns during a news conference on Thursday by saying that the recent improvements in euro-area growth and inflation were largely due to transient factors like rising food and energy prices, and that, though he is “more optimistic” about the outlook for the eurozone, the risks to growth remain tilted toward the downside. When asked if rates could rise before the end of QE, Draghi replied that policy makers wanted to see further evidence of a sustainable rise in growth and inflation before they remove policy accommodation.
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