- Italian spreads have increased recently because of budget issues
- Unemployment cost of disinflation is benign compared to previous policy tightening cycles
- Would prefer a tolerance band around target rather than a strict point target for inflation
- ECB stands ready to respond to new upside risks should they materialize
Meanwhile ECB's Vasle adds:
- Very close to rate peak
- Impossible to tell today if we are done or more could be needed
ECBs Kazimir:
- For the moment, we are fine with the current level of rates
ECB chatter is that of hope that economy is slowing, inflation will slow further and a soft landing will be forthcoming.
