More fundamentally, if the ECB was perceived as assigning higher priority to supporting the financial sector or asset prices than to safeguarding price stability – its primary statutory objective – inflation expectations could be adversely affected and even become disanchored. 3  3  6  See S. Sauer (2007), “Liquidity risk and monetary policy”, University of Munch Discussion Paper 2007-27.
BIS Review 125/2008  Of course, the separation principle does not mean that the ECB should not adjust its monetary policy at times of financial turbulence, if some adjustment is required by changes in the balance of medium term risks for price stability.