Further comments by ECB governing council, Bostjan Vasle
- Ready to step up use of monetary policy tools, could introduce new ones if necessary
- New actions are aimed to allow interest rates to be determined in relation to inflation
- Not just looking to influence short-term rates but longer-term rates as well
He also chimes in with a fiscal policy jab by saying that "because of the changed economic conditions, a reaction of other economic policies is needed - particularly fiscal policy and not just monetary policy".
The ECB pretty much gave itself plenty of leeway and room to maneuver in the stimulus package yesterday. The 10 bps rate reduction was the bare minimum and so is the size of QE i.e. €20 billion per month. The only real "dovish" message was the change in forward guidance (no longer date-based) and that QE is open-ended (in theory).
That said, if they start throwing the kitchen sink at the issue and fall short in the end, it's good riddance for the euro area economy.
