Financial markets love forward guidance from central banks. Expectations of interest rates drive asset pricing, especially in the bond market, more than any other factor.
Investors and dealers crave certainty, but instead have to make do with the next best thing: central bank forward guidance on monetary policy and rate decisions. When policy makers deviate from the script, as the European Central Bank did on Thursday, they don't like it.
Christine Lagarde, the ECB's president, unveiled a 50bp rise in interest rates, its first increase for 11 years. In the run-up to the announcement, interest rate forwards had suggested plenty were expecting such a bump, given how rampant eurozone inflation is at 8.6%. But most clung to the idea that a 25bp rise was due, because that was what the ECB had said was coming.
The ECB also laid out its new gizmo for managing eurozone government bond spreads, the Transmission Protection Instrument.
Naturally, many in the market were underwhelmed. Lagarde's predecessor, Mario Draghi, made quite the cameo this week by departing from his next job, as Italian prime minister.
This accidental conjuncture naturally threw minds back to a decade ago, when Draghi at the ECB had blown the market away with his big bazooka, the Outright Monetary Transactions, promising to do "whatever it takes" to save the euro.
This is a different crisis. But to capital market specialists, a hefty rate rise and something that sounded like a Covid mask were not what the doctor ordered.
In particular, some in the bond market complained that by raising rates more than it had said it would, the ECB could never be trusted again when it came to giving policy guidance.
But the market should judge the ECB by its actions in this case, not the carefully plotted statements of weeks ago.
In extraordinary times, the Bank took an extraordinary step by turbo-charging its monetary policy tightening.
The message is clear to all who want to read it. The ECB is serious about tackling inflation. As anyone who appreciates the unpredictability of economies must admit, the steps the ECB is going to take cannot be known at present. But the direction of travel is clear.