FRANKFURT (Reuters) – The European Central Bank will skew reinvestments of maturing debt to help more indebted members and will devise a new instrument to stop fragmentation, it said on Wednesday, seeking to temper a market rout that has fanned fears a new debt crisis.

Government bond yields have soared on the 19-country currency bloc’s periphery since the ECB unveiled plans last Thursday to raise interest rates in July and September to tame painfully high inflation that is at risk of becoming entrenched.

The sell-off was exacerbated by the absence of any concrete plan from the ECB to limit this rise in borrowing costs, raising fears that policymakers were too complacent about the situation of more indebted nations like Italy, Spain and Greece.

“The Governing Council decided that it will apply flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to preserving the functioning of the monetary policy transmission mechanism,” the ECB said after a rare unscheduled meeting.

PEPP is the ECB’s recently-ended pandemic support scheme.

“In addition, the Governing Council decided to mandate the relevant Eurosystem Committees together with the ECB services to accelerate the completion of the design of a new anti-fragmentation instrument,” it added.

Italian 10-year yields surged to 4.27% on Tuesday, their highest since early 2014 and 250 basis points more than 10-year German bonds, the euro zone’s benchmark.

Markets calmed on Wednesday as news of the ECB’s extraordinary meeting emerged and Italy’s 10-year yield fell to 4%, helping narrow the Italy-Germany spread to 230 basis points.

There is no universally accepted level for this spread but Carlo Messina, the CEO of Intesa, Italy’s largest bank, earlier on Wednesday said the country’s economic fundamentals would justify 100 to 150 basis points.

The spread on 10-year Spanish bonds meanwhile narrowed to 127 basis points from 135 on Tuesday, while for Greece, the move was to 271 basis points from around 295.

ECB President Christine Lagarde is due to speak at 1620 GMT in London in an engagement scheduled earlier. ECB board member Fabio Panetta will also speak at 1315 GMT, though his speech will be about a digital euro. Both are expected to be answering questions.

(Reporting by Balazs Koranyi and Francesco Canepa; Editing by Catherine Evans)