FRANKFURT, Germany — Europe's indebted countries could face higher borrowing costs after the U.S. Federal Reserve indicated it would start phasing out its stimulus program.
Low interest rates and creation of new money by the Fed helped push down rates on bonds around the world – including those of Portugal, Italy and Spain. The fear is that the end of stimulus will reverse that.
Higher interest costs could make it harder for governments to reduce the debts that have plagued Europe.
Borrowing rates edged higher Thursday as the Fed's new message made stocks and bonds plunge worldwide, but they steadied Friday.
Even though analysts say it's hard to predict how much rates might rise, borrowing costs remain far below last year's levels when people feared the eurozone might break up.