For instance, negative nominal yields, if applied too long, may act as an anaesthetic to euro area governments. The fiscal space gained from lower debt service costs may slow enactment of necessary fiscal and structural reforms. Brexit could well amplify the above downside risk. The initial market reaction to the Brexit vote was a typical risk-off mode – lower curves, wider spreads, flatter curves.
BIS Review 95/2008  7  central banks, such as the Federal Reserve, that have not specified an explicit numerical goal for inflation. 22  In addition, the international experience suggests that an explicit inflation goal does not imply that these central banks place more emphasis on stabilizing inflation to the detriment of stabilizing output.