If financial markets were not fretting about Greece, what would they be worrying about? In quieter times, more might have been made of diverging views on the European Central Bank’s governing council over the inflation outlook.

As I noted in previous posts, Axel Weber, the Bundesbank president, and Jürgen Stark, ECB executive board member – both German - have both warned that inflation risks are tilted upwards – contradicting the official line that they remain broadly balanced. Their comments suggested their hawkish instincts remain undimmed, even if eurozone inflation, at 1.4 per cent, is undershooting the “below but close” to 2 per cent target and likely to do so for some time.

Now, Marco Annunziata, chief economist at Unicredit, has put out a note arguing that the Weber/Stark rebellion is in fact related to the Greek crisis. The help the ECB has given Greece – for instance, in reducing the risk that Greek assets could be excluded from use in liquidity-providing operations - could have raised concerns about the central bank’s credibility Read more