It is also statecontingent guidance (to maintain the 2 percent target in a stable manner), linked to the continuation of QQE, and plays a greater role than the first description in stabilizing long-term inflation expectations at around 2 percent, thus helping to reduce long-term interest rate volatility and preventing its overshooting.
17 On the other hand, faced with very negative rates, households might start saving more rather than less. Given the downward rigidity in retail rates, and the fact that households often suffer from money illusion, household consumption planning with nominal negative interest rates is unchartered territory.