Central banks have unleashed unprecedented stimulus in recent years to prop up growth but excessive cash has now pushed inflation to multi-decade highs around much of the world
The spread of the more infectious Delta variant is the key emerging threat for the time being, with COVID-19 cases on the rise again at the global level and in most of the G7 economies.
Central bankers in the euro zone and around the world are debating what their role should be in the fight against climate change.
"Another possibility would be to pursue a more sophisticated 'tilting strategy' under which the ECB could adjust its monetary policy operations more gradually in line with sustainability considerations," Schnabel said.
"If the increase in yields is the consequence of the normalisation of the economy, it's something that is going to part of the broader framework. If there's a recovery going on, if inflation starts to go up and normalise economic activity, then nominal yields will have to go up.
Worried that rising yields would derail an eventual recovery, policymakers in March decided to "significantly" increase bond purchases and undo some of the rise in borrowing costs, which was deemed a reflection of a global repricing rather than improved economic prospects.
"It was underlined that the flexibility embodied in the PEPP was symmetric, implying that the purchase pace could be increased and decreased according to market conditions," the ECB said.
The ECB decided on Thursday to accelerate money-printing to keep a lid on euro zone borrowing costs, signalling to sceptical markets that it is determined to lay the foundation for a solid economic recovery.
"Biden just came in, the bill has already passed, and the check's going to be in the mail next week," one source said.
"These developments underline the importance of avoiding premature increases in nominal interest rates," de Cos added.
The ECB will next meet on March 11 and while an outright increase in the 1.85 trillion-euro Pandemic Emergency Bond Purchase quota is not likely, the ECB could say it will increase the flow of purchases to cap yields.
Concerns were voiced ... over developments in the exchange rate that might have negative implications for euro area financial conditions and, ultimately, consequences for the inflation outlook.
It was maintained that not every increase in nominal yields should be interpreted as an unwarranted tightening of financing conditions and trigger a corresponding policy response.
ECB Board member Fabio Panetta and Weidmann called for taking climate-related risk into account when conducting monetary policy.
By performing its own analysis of these risks on the basis of rigorous methodologies, the ECB can contribute to the accurate valuation of ... climate-related risks.
More significantly, ECB policymakers are also debating what role climate considerations should play in the institution's multi-trillion euro bond-buying programme.
The vaccine is very positive news, regarding investor confidence, consumers confidence and economic activity. But I would like to be cautious. In the short term, restrictions will continue across Europe.
Pfizer said on Monday its experimental COVID-19 vaccine was more than 90% effective based on initial trial results,