CPI inflation fell below 2% in early 2013 and has since been on a downward trajectory. It is believed that it has bottomed, but the concern is that the expected recovery in inflation over the next couple of years will be too gradual, especially if substantial amount of spare capacity in the economy maintains downward pressure on domestic prices. 

The ECB has not ruled out loosening policy further in order to meet its inflation goal of 'close to but below 2%', with President Draghi indicating that "there cannot be any limit to how far we are willing to deploy our instruments". Hence, the possibility of unwarranted tightening of monetary conditions would raise the risk that the QE programme is expanded further, including the possibility of extending the end date beyond March 2017. The deposit rate could also be cut further from the current level of -0.30%.