The European Central Bank responds to market turmoil

and a weakening economy are not the only worries preoccupying the European Central Bank (). As inflation rose higher still, the bank promised on June 9th to raise interest rates over the coming months and to end its asset purchases. Then, in subsequent days, financial markets decided to remind the central bank that the new policy could mean Italy’s public debt, at 150% of the country’s , might look wobbly as interest rates start to rise. Italian government-borrowing costs started to climb. As the yield on Italy’s ten-year sovereign bonds surpassed 4%, the central bank called an emergency meeting on June 15th. Its governing council tasked the staff with coming up with an “anti-fragmentation” tool, a government-bond-buying scheme that would help prop up sovereigns in distress. The announcement marks a fundamental change in how the sees its role in bond markets.