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May be appropriate for ECB to act in June if outlook does not improve, Nagel says

BY Reuters | ECONOMIC | 03:12 AM EDT

FRANKFURT, May 1 (Reuters) - It may be appropriate for the ECB to act in June if the outlook does not improve "markedly" as inflation developments are worse than the ECB's base case, which already entails policy tightening, Bundesbank President Joachim Nagel said on Friday.

"From today's perspective, the situation is evolving less favourably than in the earlier baseline scenario," Nagel said. "This makes it all the more appropriate for the Governing Council to respond in June if the outlook does not improve markedly."

(Reporting by Balazs Koranyi; Editing by Alison Williams)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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