M&G's Isaacs: Why would the ECB run the risk of tightening?

Decision on Thursday

Stefan Isaacs, deputy manager of the £23bn M&G Optimal Income fund, has said he believes the European Central Bank (ECB) will avoid tightening policy too early for fear of causing an unwanted economic slowdown.

The ECB is expected to end its three-year bond buying programme this September but concerns over liquidity are now prompting commentators to question whether it could be extended.  The financial markets have been affected by the political fallout in Italy, with yield spreads between Italian and German 10-year government bonds widening 2.53 percentage points on 29 May, the highest level since 2013. IW Poll: Will the ECB extend its QE programme beyond September?  Central bank president Mario Draghi has said the programme could be extended beyond September "if necessary" and a decisio...