Eurozone governments’ borrowing costs and the euro rose on Monday after European Central Bank president Mario Draghi signalled that policymakers remained on track to withdraw some of their crisis-era stimulus later this year.

Mr Draghi told the European Parliament that the bank remained confident that it could consistently hit its inflation target in the years ahead due to the strength of the eurozone’s jobs market. Markets viewed that as sign that the ECB would end the expansion of its €2.5tn quantitative easing programme at the end of this year despite headwinds emanating from the global trade war and turmoil in some emerging markets.

The comments sent the euro up as much as 0.6 per cent to $1.1815 – its highest level against the dollar since June 14. Germany’s 10-year government bond yield also jumped, climbing more than 5 basis points to an over three-month high of 0.5127 per cent. Italian, French and UK 10-year bond yields also got a lift, rising by 8.3 bps, 4.7 bps and 4.5 bps respectively.

Mr Draghi said: “Underlying inflation is expected to increase further over the coming months as the tightening labour market is pushing up wage growth.”

Negotiated wages rose to 2.2 per cent in the year to the second quarter – the highest increase for six years.

Mr Draghi added that this rise in negotiated wages “supports our confidence that the pick-up in wage growth will continue, as wage agreements often last two years or more.”

Asked about contingency planning for Brexit, Mr Draghi said that the ECB hoped that any deal “would not compromise the integrity of the single market”.

He said talks were ongoing with the Bank of England on how to prepare for a no-deal Brexit. Mr Draghi said that one issue that needed to be resolved was how “contractual positions” in the market for centrally cleared derivatives would be regulated in the event of a “sudden … unprepared, hard Brexit of the sharpest kind”.

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