The European Central Bank meets today with emerging market disorder high on its agenda.

It’s probably  too early to force a policy move – particularly since the next set of ECB economic and inflation forecasts are due in March – but it’s an unwelcome development at a time when inflation is already uncomfortably low, dropping further to just 0.7 percent in January, way below the ECB’s target of close to but below two percent.

If the market turbulence persists and a by-product is to drive the euro higher, which is quite possible, the downward pressure on prices could threaten a deflationary spiral which ECB policymakers have so far insisted will not come to pass.

But what to do? A small interest rate cut from 0.25 percent to somewhere just above zero is hardly going to be a game changer and the ECB has already said it won’t prime banks with long-term cheap money again unless they commit to lend into the real economy.

With stress tests looming and those same banks being told to deleverage and build up capital that is anything but straightforward though given the downward pressure the bank tests are likely to exert on lending there is certainly a case for an LTRO if banks do commit to pass the money on to businesses.