ECB Policymakers flash mixed signals in their weekend speeches

We have now entered the home stretch of our monetary policy tightening path. And that’s why we are returning to normality, to 25 basis-point steps.

At the moment, the improvement in margins more than compensates for the potential losses from the growth in NPLs.

The combination of a slowing economy and the interest rate hikes will bring a rise in the cost of funding for banks and possibly an increase in non-performing loans.

We do not expect a wave of NPLs, but now is not the time for complacency.

De Guindos also warned about so-called shadow banks - a category including non-bank financial firms such as funds or insurers - that are experiencing ‘some tension’ given that they are highly leveraged and more are exposed to liquidity risk.

I am convinced that there are more meetings ahead of us where we will decide on raising rates and I think we will raise them further.

It's no secret that given the fundamentals I would also be satisfied with a 50 basis point increase in interest rates but a 25 basis point increase is a return to normal.

And that means we may stay with interest rate hikes longer than we originally thought.

Headline inflation in the euro zone sometimes falls and then rises again a bit but the key point is that core inflation is still creeping up.

And that's proof that we have a problem and that we haven't solved the problem yet.