So far, our rate hikes are being transmitted forcefully to bank borrowing[11] and lending rates – faster even than during previous hiking cycles. For the euro area, bank lending rates to firms currently stand at 4.2%, up by 267 basis points since May last year. This is their highest level since January 2009.
As a result, the continued monetary support from assets purchases is not only provided by the additional net asset purchases, but also by the sizeable stock of already acquired assets and the forthcoming reinvestments. The second key channel is the signalling channel: the expectations component of long-term yields reflects market expectations of the future path of the policy-controlled short-term interest rates.