And, markets obliged, with German bund yields rising above 0.8% for the first time this year.
Draghi’s comments came during the question and answer session following the ECB’s announcement that it will keep rates on hold.
He said: “At very low levels of interest rates, asset prices tend to show higher volatility, but in terms of the impact on the monetary policy stance, the governing council was unanimous in its assessment that we should look through these developments and maintain a steady course.”
Scott Thiel, deputy CIO of fundamental fixed income at BlackRock, said in reaction to the moves that levels of volatility across fixed income markets global have seen heightened levels of volatility since the ECB’s April meeting.
“In our opinion, the recent increase in the price of oil acted as a catalyst for these moves. The reversal in the oil price prompted an unwind of some crowded positions in fixed income markets that, along with low government bond yields and dampened volatility, are one of the consequences of the extraordinarily loose monetary policies pursued by major developed economy central banks,” he said.
However, he added, with the prospect of a rate rise in the US, he too expects further volatility as markets start to focus on the “large imbalances that built up as a consequence of these monetary policy stances”.
