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How can the asset purchase programme help the ECB to fulfil its mandate of maintaining price stability?
The ECB pursues a symmetric definition of price stability – high inflation is as dangerous to our economy as deflation. In the current period of weak growth and low inflation, the interest rate instrument alone has not been sufficient to steer inflation closer to 2%. If the ECB still had room to cut interest rates, it would have done so already. Given that this option was no longer possible, the asset purchase programme was the only appropriate tool to enable the ECB to achieve a similar result. To fulfil its mandate, the ECB needs to make use of all instruments at its disposal.