The reaction to the Italian elections has been more or less the same as it has been to other elections, to other major political events, where most observers were foreseeing sharp corrections or high volatility. That’s what it is at this point in time. That’s not to underestimate the fact that protracted instability may undermine confidence.
The BSP did these to allow it to: 1) better manage credit and liquidity growth, 2) anchor inflation expectations, and 3) ward off any potential build up of excesses in some segments of the market that may be overly-reliant on the historically low interest rates for their growth and exuberance.