The shift in gears by the ECB continues as Portuguese ECB member Constancio says the goal of the Bank is to keep inflation from falling too much as well as to keep it from rising too high. That message became clear over the weekend in comments from main board member Papademos as he reversed earlier expectations that the ECB would pause in January, resulting in today’s slide in EUR versus everything.
Sharp falls in Spanish and Italian inflation early today reminded the market of the need for the ECB to keep cutting rates to try and keep disinflation from becoming deflation.
