(Bloomberg) -- The European Central Bank is closely monitoring nominal bond yields to judge whether financing conditions in the euro area are favorable enough to support the economy during the pandemic, President Christine Lagarde said.

The comments signal possible concern that longer-term bond yields have been rising, despite the ECB’s pledge to keep ultra-loose financing conditions locked in.

“Within the broad-based set of indicators that we monitor to assess whether financing conditions are still favorable, risk-free overnight indexed swap rates and sovereign yields are particularly important,” Lagarde said at a European Parliament event on Monday.

“Banks use those yields as a reference when setting the price of their loans to households and firms,” she said in a speech on Monday. “Accordingly, the ECB is closely monitoring the evolution of longer-term nominal bond yields.”

European bonds extended gains after the comments, with German 30-year yields falling 5 basis points to 0.16%.

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