At the time of our meeting, nominal ten-year overnight index swap (OIS) rates were up by about 30 basis points, entirely reflecting a rise in the inflation component (left chart, slide 9). These movements should not be seen as reflecting a genuine reappraisal of the expected future path of inflation.
Most EU member states now have budget deficits exceeding the limit of 3 per cent of GDP under the Stability and Growth Pact. As a result, the Commission has ordered or will order these member states to reduce their deficits to below 3 per cent of GDP within a short span of years.