Likewise, the Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past this first interest rate hike and, in any case, for as long as necessary to maintain ample liquidity conditions and an appropriate monetary policy stance. As concerns the PEPP, the Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024. In any case, the future rolloff of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance. As was to be expected, the monetary policy normalisation that began in December has translated into higher short and long-term interest rates in the euro area. Specifically, the 10-year OIS rate, which proxies the euro area risk-free interest rate, has risen by 143 bp since the beginning of the year, while the 12-month EURIBOR has increased by 170 bp. Over the same period, the risk premium on Spanish 10-year government bonds has increased by 44 bp. 4  The new Transmission Protection Instrument (TPI) The TPI is necessary to support the effective transmission of monetary policy. While we continue normalising monetary policy, the TPI will ensure that it is transmitted smoothly across all euro area countries. The creation of this new instrument stems from the conviction that the singleness of our monetary policy is a precondition for the ECB to be able to deliver on its price stability mandate.
This focus is appropriate. Like other central banks, our monetary policy mandate concerns domestic objectives: maximum sustainable employment and price stability. Our monetary policy actions, however, often have global consequences that, in turn, influence the U.S. economy and financial markets. At the same time, external factors can impact the monetary policy transmission mechanism in the U.S. and influence the effectiveness of our monetary policy in achieving our objectives. We cannot appropriately calibrate policy without keeping these spillover and feedback effects in mind. In some cases, these effects can be significant. An example is the market volatility we saw in the spring and summer of 2013 during the so-called “taper tantrum.” In the U.S., we saw a spike in Treasury yields, with the 10-year rate rising by more than 100 basis points from early May of that year before peaking in September. Financial markets in emerging market economies (EME) were hit hard as well, with declines in equity prices, a widening in sovereign debt spreads and a sharp increase in foreign exchange volatility. Volatility in EME financial markets re-emerged last summer and has continued into this year. For EMEs as a group, declines in equity prices and currency values have been larger than what we experienced during the taper tantrum. The recent episode, however, appears to largely reflect concerns about risks emanating from EMEs themselves, rather than concerns about the direction of Fed policy. Three related concerns appear to be at the forefront. First, there has been a broad-based slowdown in EME growth.