Will deflation settle the ECB debate?

The commencement last week of the German Constitutional Court hearing into the legality of the European Central Bank’s Outright Monetary Transactions (OMTs) programme has re-stoked the debate over the ECB’s remit and the appropriate breadth of its responsibilities. But a further fall in euro-zone inflation – and even the threat of deflation – would weaken the objections of Bundesbank President Jens Weidmann and others to more decisive unconventional policy action from the central bank.