When the European Central Bank’s governing council met on December 14, there was little to surprise financial markets, because no policy changes could be gleaned from public remarks. The previous meeting, in late October, had already set the stage for the normalisation of monetary policy, with the announcement that the ECB would halve its monthly asset purchases, from €60bn ($71bn) to €30bn, beginning in January 2018.

The motivation behind normalisation does not appear to be the eurozone’s inflation performance, which continues to undershoot the target of roughly 2% by an uncomfortable margin. Inflation expectations, while inching up recently, also appear anchored well below target, despite recent soaring confidence readings. And the ECB’s own forecast suggests that it does not anticipate that price growth will breach 2% anytime soon.