Bond yields will normalize with inflation – ECB’s Nowotny

FXStreet (Mumbai) - The European Central Bank (ECB) member Edwald Nowotny said today that the negative bond yields are an unavoidable distortion and that the yields would normalize as inflation rebounds.

Speaking to Bloomberg TV, Nowotny said inflation is likely to normalize from the second half of 2015. On the issue of buying debt with negative yields, the policy maker added that the negative yields carry inherent risk of future losses and thus it is preferable to buy longer-term debt. He also assured there is no threat of shortage of bonds for QE and that it is too early to talk about adjusting the monthly QE amount.