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.
In recent years there have been a number of minor interest-rate reductions in response to capital inflows. The current interest rate spread to the euro is approximately 25-30 basis points, depending on which short-term interest rates are considered. There are many opinions on what a “normal spread” should be, but it cannot be pinpointed.