In other words, an adverse feedback loop emerges among sovereign risk, the financial system and real economic activities. Although the cause of sovereign debt problems in European peripheral countries varies from country to country, the common nature of the problem is such adverse feedback loop.
The agreement is not only consistent with the expectations underpinning our forecast, but also shows that the Phillips curve certainly retains its validity in Germany. In October last year the markets, too, expected the asset purchases to be terminated by the end of 2018.