The European Central Bank will need to monitor how moving oil prices impact inflation expectations, governing council member Luc Coene said yesterday.

Coene said that if oil prices were to rise again after a recent sharp drop, they might only have a limited impact on inflation but the psychological impact may be bigger.

“The question is of course to what extent will it impact inflationary expectations. That is very difficult because this is about psychology and not much about the economy,' Coene told reporters in Brussels yesterday.

“It’s clear that we have systematically underestimated the downward forces that work on inflation,” Coene also said.

Coene repeated the line of ECB President Mario Draghi on Thursday that the central bank would monitor inflation very closely and may decide on further measures if this proves to be necessary.