And the process of gradual disinflation did not just affect individual, volatile components of inflation such as energy. Instead, it reflected a broad-based reduction in all major inflation components since last summer. The disinflationary trend was further confirmed by the latest yearly inflation figures published by Eurostat. These were revised down by almost half a percentage point to 0.7% in October.
Overall, we have been witnessing a disinflation “in slow motion” for several months now. And combined with still weak economic and monetary dynamics, the latest data suggest that we may experience a prolonged period of low inflation going forward. So why did we act? It was not because we see deflation risks materialising in the euro area.