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.