Italian bond yields are up 2.5% after Draghi's decision and the Italian companies index is down 3.5%. And it's not over yet: the ECB will raise rates today.
Europe's central bank is in a very difficult position. On the one hand there is a need for a rate hike to combat unstoppable inflation. And on the other hand the threat of an Italian default. Recall that Italy's debt is the biggest in Europe, it exceeds 100% of GDP.
Italy may cause another debt crisis in Europe. If the ECB fails to cope with the Italian government debt, the European economy may face a depression like in the U.S. in the 30s of last century.
Let's not forget that Europe is currently experiencing a period of record heat waves, which is destroying crops in northern Italy and southern France. And then there is winter and possible rationing of energy consumption.