At an extreme, such developments could even amount to a type of “secular stagnation,” in which monetary policy would need to keep real interest rates persistently quite low relative to historical norms to promote full employment and price stability, absent a highly expansive fiscal policy.
By the end of 2014, shortly before we announced purchases of government bonds, annual inflows into euro area stock markets by non-residents had reached 4% of euro area GDP – the highest on record. Policy stimulus and measures to repair the bank lending channel were clearly seen as having a positive effect overall on the euro area economy.