In a Financial Times interview, ECB Executive Board member Benoit Coeure said the Eurozone economy is not performing too badly for now, as supported by services and construction. However, signals from the financial markets, in particular from bonds, were “quite alarming”.

He added ECB have different tools to use if outlook worsened. If cutting interest rates is the beat option, ECB would have to “consider the impact of negative rates on financial intermediation, especially for banks”. In that case, policymakers “would have to consider whether a tiering system is needed.” But he also emphasized that “today the prevailing view in the Governing Council is that it is not, but we also agree that it deserves further reflection.”

On reviewing ECB’s inflation target, Coeure said “we have more urgent issues to face right now, but I’m pretty sure that we’ll do it at some point nevertheless.”

Over the weekend, ECB Vice President Luis de Guindos said current monetary policy is “fully compatible with both inflation and real activity.” And, “de-anchoring of inflation expectations” is needed before ECB ease monetary policy again.

He told Italian newspaper Corriere della Sera that “what we need to see is a de-anchoring of inflation expectations” for more policy stimulus. However, “this has not yet happened, despite the fact that there has been a drop in market-based inflation expectations.” “If there is a further deterioration, then we will react,” de Guindos added. “But for now, our monetary policy stance is fully compatible with both inflation and real activity.”

On the impact of global trade tensions, de Guindos said “you can certainly smooth the impact with monetary policy, but you will not be able to address and fix this kind of problems with monetary policy”.

Separately, Governing Council member Ewald Nowotny said it would be “reasonable” to have “some more flexibility” on inflation target. And, he was “in favor of keeping the 2 percent target but with a corridor of 0.5 or 1 percent, up or down. A precision landing is hardly possible.”

ECB President Mario Draghi sent separate letters to four Members of the European Parliaments today, explaining the impact of the central bank’s monetary policy. There Draghi noted the “overall effect” of ECB’s monetary policy on bank profitability has so far been “broadly neutral”. The negative impact on banks’ net interest margins has been offset by an improvement in the economic outlook that has led to an “increase in the total volume of loans” and, moreover,” improved credit quality”, which has reduced provisioning costs. Though, he also pledged to carefully monitor the overall effects of negative interest rates.

Draghi also said lending to non-financial corporations (NFCs) “recovered significantly” since the ECB introduced its non-standard monetary policy measures. And overall, the non-standard measures “have contributed to a more uniform transmission of monetary policy to bank lending rates across euro area countries and firm sizes.”

Moreover, taking into account both financial and macroeconomic effects, ECB research finds that “lower-income households have been among the main beneficiaries of the ECB’s non-standard monetary policy measures, through their positive impact on growth and employment creation.”