This decrease into more negative territory incentivises banks to invest the liquidity they receive as a consequence of the asset purchases into longer-maturity and higher yielding assets. The APP has been recalibrated since its introduction and in early 2016 the Governing Council announced four additional targeted longer-term refinancing operations (TLTROs II) to further support credit availability to euro area firms and households.
Several factors have propelled reasonably strong economic growth. A critical element has been supportive financial conditions. Despite the tightening of monetary policy that began in mid-2004, short-term interest rates were at fairly low levels until recently, and the effects of those low rates have continued to spur household and business spending.