Comments from the ECB’s Coeure:
- ECB can act even if rates close to zero lower band
- Inflation expectations remained well anchored over the medium term
The problem with the ECB is that right now policymakers believe they can anchor inflationary expectations by repeating that deflation is not a worry etc. They have been saying deflation is only a 5% risk and things along those lines but their actions next week will say a lot more about what they really believe.