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Effects of ECB balance sheet policy announcements on inflation expectations

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  • Richhild Moessner
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    Abstract

    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.

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    Bibliographic Info

    Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 416.

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    Date of creation: Mar 2014
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    Handle: RePEc:dnb:dnbwpp:416

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    Keywords: Monetary policy; central bank communication; balance sheet policies; inflation expectations;

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