Lagarde explained that the decision was unanimous given the inflation evolution in Europe, which has reached extremely high levels. This seems like a good decision and, to a certain extent, has been interpreted by the market.
But what has not yet been very clear are two aspects:
First, if they are going to continue with more aggressive rises in the next meetings, something that Lagarde has not been able to clarify. She only said that it will depend on the following economic data. But obviously, Europe’s inflation will not subside in the coming months, especially if the Euro remains at levels as low as it is now. The next ECB meeting is in September. Therefore, if nothing changes, another rise in interest rates of the same magnitude will be likely.
Second, the program to protect peripheral bonds, most notably Italy, has been loosely defined. The action of the European Central Bank, buying bonds from the affected country in the event of fragmentation, will depend on the country's macroeconomic conditions and the degree of compliance with European fiscal regulations. The latter is difficult to quantify and could even lead one to think that a country like Italy might not be eligible under these conditions.