I intend to argue that, at least in the euro area, empirical evidence suggests that the amount of purchases needed to deliver a given compression of the term premium is likely to fall over time as the acquired stock of assets increases.
But crucially, once their policy objectives come closer to being achieved, central banks can safeguard low bond yields, if judged necessary, only to the extent they provide effective guidance on the future path of short-term interest rates. Asset purchases and rate forward guidance Let me start with the interaction between rate forward guidance and asset purchases.