With a monetary policy that has already used up almost all of its ammunition, the only factor that could restart the inflation would be a powerful tax stimulus. There is a path that is not being given enough attention and that could well be the missing link: the sustainable tax stimulus.
No-one really knows why Mario Draghi said last week that for the time being there are no reasons to increase the ECB’s anti-deflation weaponry beyond March 2017. He said the matter had not even been discussed during the central bank’s Council Meeting on Thursday. The euro has risen and the yield on the German bund as well.