Draghi: First, the stability of the financial system is at risk if interest rates are too low for too long. Until now, however, we have only seen significant price increases in some specific and limited markets, for example, in some real estate markets in Europe. The second serious risk is that inflation, which is already clearly below our 2% target, might fall further.
Yet we aren’t seeing any deflation, i.e. a general fall in prices. But we must be very careful that we do not permanently fall below 1% inflation and thus into the danger zone. SPIEGEL: How do you intend to react to it – should interest rates fall further? Draghi: At the moment we see no need for immediate action. We don’t have Japanese conditions.