If different assets are imperfect substitutes, interventions by the central bank that affect the supply of various assets available to private investors could influence the prices of many other assets, including investment grade bonds, equities, real estate or foreign assets with consequences for the exchange rate.13 Higher valuation would also facilitate the process of balance sheet repair that is ongoing in the euro area, and more generally contribute to support credit growth.
We see that the various effects also impact the credit channel. Finally, asset purchases would operate through a signalling effect, i.e. by affecting expectations of future inflation and the future likely path of the key ECB rates.