- We are not resigned to allowing inflation to remain too low for too long
- Unwarranted tightening of monetary conditions from FX or market developments would require adjustment of our conventional instruments
- At other end of spectrum a downshift in inflation expectations would be context for broad based asset buying plan
- Timing is key issue in monetary policy response
- Immediate situation would require target measures help alleviate credit constraints
- Expects low inflation to be prolonged but gradual return close to 2.0% target
- Our responsibility is to be alert to risks of inflation not returning to 2.0%
- Must be prepared for action if these risks emerge
- Need to be particularly watchful for a potential negative spiral of low inflation and falling inflation expectations
Well I guess we have the low down on which way the ECB is going to act. From that comment it sounds like we could well be getting a dose of QE. The market might take that as the ECB ruling out rate cuts or at least a negative deposit rate.
The euro has only lost 10 pips on the comments to 1.3635, which could mean that it’s comfortable with whatever outcome the ECB decides. We’re not going to get a proper consensus until markets are fully open tomorrow though.
