If the European Central Bank’s press conference were a bond auction, people would be freaking out about how badly today’s failed.

As a matter of course, the ECB’s head of press Christine Graeff routinely brings the curtain down after one hour, usually leaving plenty of attending journalists disappointed, with their hands still in the air. Today’s was wrapped up after 47 minutes (and 12 minutes of that was, as usual, devoted to reading out a prepared statement). A bid-to-cover ratio of 0.78, so to speak.

It’s true that President Mario Draghi pre-empted a lot of possible questions by saying that the ECB’s top brass didn’t even discuss the outlook for its quantitative easing program after March 2017, when it is scheduled t0 end. The most he would concede was that, ultimately, a “tapering” of bond purchases—currently running at 80 billion euros ($88 billion) a month—was “likely,” but then nobody seriously expected the ECB to go from €80 billion to zero in a month.

 

The sad truth is that the ECB is out of possibilities: Draghi can’t cut interest rates further into negative territory without ratcheting up financial stability risks—Eurozone banks are already struggling enough—and he can’t depress market interest rates further through bond-buying without breaking (admittedly self-imposed) rules to forestall German criticism that he is bailing out reform-shy southern Europeans. All that he can do is hope that something will turn up.

Fortunately, some things are turning up: the oil price, for one, and the dollar for another. The first, Draghi noted, will keep the headline inflation rate rising through next year and, probably, through 2018, which will ease the Angst about deflation. The ECB is supposed to keep consumer inflation just under 2%, but it has consistently undershot for nearly three years, only recently ticking up.

Eurozone annual inflation rate, %. Source: ieconomics.com

 

As for the dollar, it hit its highest level since January against the euro after Draghi finished speaking, as traders digested the notion that there will be no sudden stop to free money from the ECB, even if the Federal Reserve raises its key rate again later this year, as most expect it to. That will keep the Eurozone’s exports competitive—importantly so, given that Draghi characterized sluggish external demand as one of the key downside risks to the economy.

U.S. (black) and German (blue) 2-year government bond yields. Source: ieconomics.com

 

If both the dollar and oil can continue their current trends (neither of which can be taken for granted) then the Eurozone’s inflation rate could be approaching its target quickly enough for the ECB to start tapering after March. Draghi said the ECB would “look through” any energy-related blips in the inflation rate, but German unhappiness with quantitative easing may force his hand sooner than he would otherwise like. The Deutsche Bundesbank is ideologically opposed to it in any case, German savers are angry at vanishing returns, insurers are seeing their shortfalls against future liabilities grow, and to cap it all, both of Germany’s big private banks, and many of its smaller ones, are in trouble and blaming low ECB rates at least in part for their problems.

All will become clearer in December, Draghi promised, when the ECB will update its forecasts for growth and inflation over the next two years (a first forecast for 2019 will also be available to justify whatever action they decide on). Ben May, an analyst at Oxford Economics, pointed out in a note to clients that Draghi likes to give clear guidance to markets where he can, and that was conspicuously absent from today’s comments. Draghi’s refusal to provide hints about the next governing council meeting in December suggests its members have no clear consensus what to do next.

“This perhaps suggests that the ECB policy announcement is likely to be towards the more cautious end of expectations and that the doves are struggling to build a strong consensus for bold action,” May said.