When the ECB goes into an ad hoc meeting less than a week after its last official rate-setting meeting, we know it must be an emergency. The widening in bond spreads but also the increase in funding costs has made monetary policy in the eurozone significantly more restrictive, even before the very first rate lift-off. The widening in bond spreads has immediately brought back bad memories of the euro crisis in 2010 and 2012. But we think concerns about a rerun are overdone. The eurozone is institutionally better prepared to face such a challenge; high inflation could actually benefit debt-to-GDP ratios and also bring ... (full story)