ECB President Lagarde: Will not tolerate fragmentation that would impair transmission of monetary policy

In response to a question about whether the European Central Bank's (ECB) commitment to prevent fragmentation in the Eurozone is enough to prevent it, President Christine Lagarde gave an unconvincing response, where she essentially just repeated the commitment the ECB made to prevent fragmentation that might impair the transmission of its monetary policy. Various commentators on Twitter accused Lagarde of not wanting to admit that the ECB hasn't yet created an actual monetary policy tool to prevent transmission. 

Market Reaction

The ECB's hawkish policy announcement on Thursday in which they highlighted a 25 bps hike in July and a likely 50 bps hike in September appears to have sparked fears of Eurozone economic fragmentation, as represented by the underperformance of so-called peripheral Eurozone bonds versus core bonds.