ECB ready to react to unwarranted tightening, but is cautious on Greece

Draghi, president of ECB, states, "measurable trend reversal in prices and a surge in volatility". He noted that a period of high volatility has often been observed after other episodes of QE in other jurisdictions, and result from a reassessment of the macroeconomic outlook. He also noted that despite this correction, financial conditions remain supportive and bank lending rates have continued to ease up to April, according to the latest data published by the ECB. 

However, the president stated that the ECB was monitoring "conditions to detect signs of unwarranted tightening", and would react if necessary, and mentioned possible risks related to financial stability, although not visible at this stage, and repeated that the ECB would be ready to use macroprudential tools, should it be necessary. 
On Greece, the president explained that the ceiling on Greek T-Bills held by the Greek banking sector was aimed at avoiding being in breach of the prohibition of monetary financing and warned that a change in this ceiling would not be possible, unless there is a credible perspective for a successful conclusion of the last review of the second programme, which would pave the way for a disbursement of the remaining funds by euro area member states. 

He insisted that the decision about the conclusion of the programme was a political decision, lying exclusively with the Eurogroup, while the ECB was a rules-based institution. However, we believe the ECB will face a difficult decision if the programme expires at the end of the month without a conclusion of the last review. It would have no choice but tighten eligibility conditions for the ELA, or even shut it down, which likely would precipitate a banking crisis in Greece and could eventually force Greece out of the single currency union.