Although the level of purchases may vary depending on economic conditions, the program will continue until there is a substantial improvement in the outlook for the labor market, in a context of price stability. I see the first tool, forward guidance about rates, as really an extension of traditional central bank rate-setting policy.
To expect the favourable developments of the past to continue indefinitely might otherwise be tantamount to systematically underestimating credit risk. 4. A change in interest rates could hit parts of the banking system hard This problem is compounded by the fact that German banks have expanded their maturity transformation in recent years.