The shadow of its former President Mario Draghi hung over the meeting of the Central Bank Council of the European Central Bank on Thursday in two respects.
Not only is Draghi's legendary London speech, in which he announced that the ECB would do everything necessary within the scope of its mandate to secure the euro, almost ten years old to the day.
The consequences of this speech continue to influence the actions of the ECB to this day.
But Draghi also played a role in another respect, because he failed as Prime Minister of Italy on the very day of the meeting of the Central Bank Council.
This failure raises the question of a possible second euro crisis and the role of the ECB in such a crisis, at least according to the fearful minds.
The ECB Christine Lagardes did the least it had to do in terms of monetary policy on Thursday with inflation at 8.6 percent.
It raised key interest rates by 0.50 percentage points, ending – far too late – the chapter of negative key interest rates that had started in 2014.
At the same time, she held out the prospect of further increases in key interest rates for the coming meetings, which are to be made depending on the respective data situation.
Lagarde and her people say goodbye to Forward Guidance
With this action, the central bank said goodbye to an instrument known in the professional world as “forward guidance”, which may make sense in quiet times with largely stable inflation rates, but can be downright damaging in extremely uncertain times.
The idea of this tool is to provide a medium-term path for key interest rates, so that the central bank's intentions are clear at an early stage and that financial markets, as well as companies and households, can react in a timely manner.
In times of rapidly rising inflation rates, however, a central bank that ties its actions to its announcements in the medium term risks being surprised by reality and reacting too slowly to currency depreciation.
This is exactly what happened to the ECB in the recent past.
Just a few weeks ago, it announced rate hikes of 0.25 percentage points for its July meeting.
But then she was surprised by the dynamics of inflation and probably also by the extent of the devaluation of the euro on the foreign exchange market, which prompted her to raise interest rates by 0.5 percentage points.
Since the inflation potential remains considerable, at least from today's perspective, the ECB is far from having reached the end of its rate hikes.
The ECB has dug a hole that is difficult to exit
If Thursday's interest rate decisions and the prospect of further interest rate hikes left a good impression, the same cannot be said of the unfortunately ill-fated attempt to curb increases in bond yields in individual countries that were perceived as undesirable.
Here the ECB dug a hole by way of a hastily convened special meeting of its central bank council, from which it will not come out again as long as it diligently continues to dig.
Lagarde on Thursday unveiled a new tool called the TPI (Transmission Protection Instrument), under which the ECB can buy a country's government bonds in the event of "unfounded and disorderly" increases in bond yields.
Such purchases easily get the odor of an actually forbidden financing of over-indebted states through the money press.
The ECB is therefore keen to define the instrument so unassailable from a legal point of view that foreseeable lawsuits before the Federal Constitutional Court will not be successful.
The ECB is attempting to square the circle
However, overly strict legal confinement of the instrument would reduce its effectiveness.
Monetary policy cannot easily escape from this squaring of the circle.
It was not without reason that Lagarde said that the ECB hoped never to have to use this instrument.
In any case, the sharp increase in Italian bond yields on Thursday reflects the assessment of the financial markets that the resignation of a respected prime minister and his likely subsequent replacement by a government that in the old spirit could initially call for additional sovereign debt is no reason for a central bank, a to rush to the country's aid with bond purchases.
At the same time, the ECB must prepare itself for its willingness to help to be put to the test by ruthless national politicians.
One wished for the ECB to pass this test.