ECB’s Actions to ensure Safety Margin

European Central Bank executive board member Benoit Coeure said Monday that last month’s rate cut to 0.25% was meant to keep a “safety margin” above a 0% inflation rate.

Speaking at the Paris Europlace International Financial Forum in Tokyo, Mr. Coeure said that the action was not due to worries over deflation materializing.

“With the recovery taking hold, we still expect inflation to very gradually return to levels below but close to 2%,” he said.  “We acted because we wanted to keep a sufficient safety margin above 0% inflation,” he added.

WSJ

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