Comments from the ECB #2 Constancio in a paper:
- Buying government bonds is certainly something we can’t exclude
- Sovereign QE was discussed at Sept policy meeting but it was not on the table for decision
- We are not in deflation and we will not be in deflation
- Risk that longer-term inflation expectations get de-anchored has definitely increased
Dovish comments from Constancio but nothing out-of-line with what we’ve heard before. No reaction from the euro as it looks like the sellers are finally taking a hiatus, last at 1.2940.
