Fog in Venice

Thick fog has this morning encircled Venice, where the European Central Bank is holding its interest rate setting meeting. No doubt it will add to the ECB’s feeling of not really knowing what is going on out there in the real economy. My own impression is that Venice is as busy as ever. The gondoliers certainly seem to be doing a good trade, but why are so many people wearing sunglasses? True, inflation pressures are firmly under control: I paid just €2 for a Cappuccino, which appears positively deflationary compared with Frankfurt prices. But heavy rain is threatened for the weekend, so maybe the ECB will have become more worried about excess liquidity…

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