The hawk stance in Europe comes from a strong wage bargaining process going on in Europe (mostly in Germany) and the high rate of capacity utilization. No one at the ECB wants an overheated economy and they will do everything needed to prevent it. However very little concerns seem to have built up as a result of the recent stock market turmoil. There does not seem to exist a potential “Trichet put” as the famously used in the US at times of financial distress. The famous “Greenspan put” was a confidence in the market that in the case of a large plunge of the equity market, Greenspan would respond by lowering the cost of borrowing injecting liquidity in the system. This is what happened when LTCM collapsed. Even if the “Trichet put” is not in the mind of European policy makers, be sure that if the European financial market faces a considerable fall in the financial markets that risk its stability, policy makers will react accordingly. Hawkishness can go together with common sense.