• ECB subject to jurisdiction of ECJ
  • View low inflation for protracted period of time
  • Length of time of low inflation not unprecedented
  • Most of downward path in core inflation is mostly down to price adjustment in programme countries
  • This shows that in part this is a one off effect

This is a big key point in ECB thinking and as far as I can recall it’s the first time he’s talked in detail about the moves in core inflation. In theory this should be bullish for the euro as it strengthens the call that the ECB isn’t worried about lower inflation, thus taking further rate cuts off the table.