The European Central Bank’s policy-setting Governing Council will hold a rare, unscheduled meeting on Wednesday to discuss the turmoil in bond markets, underscoring official concern around a blowout in borrowing costs for some euro zone nations.

Bond yields have risen sharply since the ECB promised a series of rate hikes last Thursday and the spread between the yields of German bonds and those of more indebted southern nations, particularly Italy, soared to its highest in over two years.

“The Governing Council will have an ad-hoc meeting on Wednesday to discuss current market conditions,” an ECB spokesperson said.

The meeting was scheduled for 0900 GMT but it was not yet clear whether a statement would be published, several people with direct knowledge said.

Invitations to the meeting were sent out on Tuesday and some policymakers, who were expected to attend a conference in Milan on Wednesday, called off their appearances.

The last time the ECB held an unscheduled meeting during market stress it rolled out the Pandemic Emergency Purchase Programme, a 1.7 trillion euro ($1.78 trillion) bond buying scheme that proved to be its main tool during the COVID-19 pandemic.

The options open to the ECB to fight so-called fragmentation risk – when some countries face markedly higher borrowing costs than others in the same currency bloc – include channelling reinvestments from maturing bonds into markets experiencing stress or devising a brand new instrument. Some analysts have warned, however, that reinvestments alone are unlikely to be enough.

The discussion comes on the same day that the US Federal Reserve is expected to hike interest rates, with investors dramatically raising their bets for a 75 basis point increase, a swing in expectations that has fuelled a violent sell-off across world markets.

News of the ECB meeting sent the euro surging over half a percent to 1.0487 against the dollar , 10-year Italian yields fell 22 basis points and Italian stock futures rose sharply.

Earlier, 10-year German yields , a benchmark for the 19-country currency union, had hit 1.77 per cent, their highest level since early 2014 while their Italian counterparts jumped 240 basis points higher, the largest spread since early 2020.

ECB board member Isabel Schnabel, the head of the bank’s market operations, on Tuesday said that the ECB was “closely” monitoring the situation and was ready to deploy both existing and new tools if it found that the market repricing was “disorderly.”

“We will not tolerate changes in financing conditions that go beyond fundamental factors and that threaten monetary policy transmission,” Schnabel said, adding that there were no limits to its commitment to prevent fragmentation.

She argued that as a first line of defence, the ECB could deploy cash from maturing bonds into stressed markets and if needed, the bank could devise a new instrument.

But Schnabel argued against pre-emptively announcing a tool as it would need to be tailored to a particular situation with conditions, limits and safeguards set on a case-by-case basis.

“Now we’re talking. Just talking, but it’s a start,” Pictet Wealth Management economist Frederik Ducrozet said.

“We should get a statement along the lines reflecting a willingness to act and then maybe they will also task committees to work on options, this is what was missing from last week,” Ducrozet added.