Effects of ECB Balance Sheet Policy Announcements on Inflation Expectations
De Nederlandsche Bank
March 12, 2014
De Nederlandsche Bank Working Paper No. 416
We investigate whether ECB balance sheet policy announcements in the wake of the global financial crisis have affected the ECB's monetary policy credibility as measured by long-term inflation expectations, by looking at their effects on euro area inflation swap rates of maturities up to 10 years. We consider asset purchase programmes and long-term refinancing operations with maturities above 6 months. We find that these announcements only led to a slight increase in long-term inflation expectations. We therefore find no strong evidence to suggest that ECB balance sheet policy announcements have led to much higher long-term inflation expectations, suggesting that the monetary policy credibility of the ECB has not been harmed by these policies.
Number of Pages in PDF File: 17
Keywords: Monetary policy, central bank communication, balance sheet policies, inflation expectations
JEL Classification: E52, E58
Date posted: March 13, 2014
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