This medium-term orientation reflects the fact that prices can be volatile in the short run for reasons outside the control of the ECB, or indeed any central bank, such as changes in indirect taxes and shocks to commodity prices, especially oil prices. It would therefore be sub-optimal for a central bank to stick rigidly to its inflation objective over very short-term horizons.
The year-on-year rate of increase in bank lending, which once declined to below 0.5 percent in the first half of fiscal 2012, has since been moderately expanding to slightly over 2 percent. The amount of corporate bonds issued in the April-June quarter reached a high level for the first time since the July-September quarter of 1998, which was coincidentally the quarter when deflation began.