We have seen strong signalling effects, reflected in rising inflation expectations, a rebound in consumer and business confidence and higher equity prices. And we have also seen evidence of significant portfolio rebalancing effects, both across assets classes (i.e. towards more risky assets) and across jurisdictions, producing a fall in the effective exchange rate.
As a result, the economic recovery has broadened and the June ECB staff projections now envisage inflation to average at 0.3% in 2015, 1.5% in 2016 and 1.8% in 2017. Our actions have proven timely and provide us, so far, with comfort that the medium-term inflation outlook is secure. Both output and inflation forecasts are broadly balanced.