Other warning signals were coming from market expectations: inflation expectations measured on the basis of long-term index-linked government bonds were tending to rise; the prices of inflation swaps signaled growing fears of inflation for long-term maturities as well. Against this background, the Governing Council of the ECB decided to raise reference rates by 0.25 percentage points.
In the days following the rate hike, inflation expectations derived from the financial markets ceased their upward trend; it appears that they are now beginning to fall back.