The European Central Bank’s crisis-fighting measures hit an unexpected snag with the surprise flop of “sterilising” operations to counter the inflationary impact of its €76.5bn outstanding eurozone government bond purchases. Tuesday’s operations flopped because overnight market interest rates were higher than the maximum 1 per cent the ECB was prepared to pay – making its offer unattractive to many banks.

To counter inflation, the ECB has sought to withdraw amounts equivalent to the stock of bonds from the financial markets – allowing Jean-Claude Trichet, ECB president, to argue that the programme was different from US-style “quantitative easing” aimed at boosting the economy. The sterilising operations have been largely symbolic because the ECB has continued to meet in full eurozone banks’ demands for liquidity.