The European Central Bank (ECB) seems to be tiptoeing toward further easing of monetary policy in the euro area. Inflation has dropped to just 0.5 percent in March and the pressure for action is increasing. During the biannual financial meetings in Washington, the International Monetary Fund (IMF) reiterated its earlier recommendation [pdf] that the ECB do more to counter excessively low inflation in the euro area. In a sign of its attitudinal change, Mario Draghi, the ECB president—who had previously thanked the IMF sarcastically for being “extremely generous in its suggestions on what we should do or not do”—signaled the central bank’s intent to ease monetary policy if the euro exchange rate appreciates further. In addition, an ECB executive board member, Benoît Cœuré, discussed possible asset purchases in a speech.

In this posting, He discuss short-term options before the ECB.