- Fragmentation has always been a concern for the ECB
- PEPP was launched with flexibility in mind, and this applies to the reinvestment phase as well
- We also decided yesterday to mandate the relevant committees to accelerate the completion of the design of a new anti-fragmentation instrument
- Inflation is very high, more persistent and broad-based than we thought some months ago
- We intend to raise rates by 0.25% in July
- For September, we can consider a bigger increase if the inflation outlook persists or deteriorates
On fragmentation risks, it is better late than never. This rushed decision-making is but a reflection of the lack of awareness and urgency by the central bank over the past six months - ever since they announced the end of PEPP.
As for the July and September rate hikes, his messaging isn't anything new.
