ECB governing council member, Olli Rehn, speaks in Helsinki
- Low inflation expectations reflect investors' misgivings about ECB's own policy
- Long-lasting slow inflation may have lowered inflation expectations durably
- Markets may find that monetary policy measures, under the current circumstances, are not effective enough to accelerate inflation
He's mainly speaking in relation to the key market gauge of long-term Eurozone inflation expectations, which is a measure of confidence towards the ECB being able to normalise its monetary policy:
The reading has fallen rather dramatically since Q4 2018 and highlights that markets are not convinced by the ECB being able to normalise policy in the near future. Rehn also made a mention that the central bank could toy with the idea of accepting that inflation will undershoot the 2% level, something that Draghi is currently struggling to come to terms with as we saw from his language earlier this month.
