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The ECB’s announcements of non-standard measures and longer-term inflation expectations

Karadi, Peter, (2017), “The ECB’s announcements of non-standard measures and longer-term inflation expectations”, European Central Bank Research Bulletin No. 33, 18 Απριλίου

Stable and well-anchored longer-term inflation expectations bolster the ability of the European Central Bank (ECB) to achieve its medium-term inflation objective. This article assesses the effectiveness of non-standard monetary policy measures in guiding longer-term inflation expectations in an environment where standard interest rate policy approaches the lower bound. This causal channel is identified by looking at the change in five-year-ahead inflation expectations following announcements of non-standard measures in the period since 2013. The results suggest that non-standard measures, and in particular the asset purchase programme (APP), were conducive to preventing a potential unanchoring of longer-term inflation expectations.

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