This form of sticky prices, together with imperfect competition, allow monetary policy to have real effects in the short run, while remaining neutral for the real side of the economy in the long run. The sticky prices generate distortions that mean allocations and output can be inefficient in the face of shocks.
Monetary policy has had a positive effect on bank profitability since 2014 by reducing funding costs, generating capital gains on higher prices of financial assets affected by the asset purchase programme, reducing bank impairment costs and increasing credit volumes as a result of a strengthening recovery.