Evidence of a sustained rise in underlying inflation has yet to be seen, while falling industrial producer prices also signal weak inflation dynamics. (2)  Second, demand-side factors, as reflected in the persistence of the euro-area’s negative output gap, continue to exert downward pressures on prices. (3)  Third, under the Phillips curve relationship, inflation expectations are a main determinant of the present inflation.
Consequently, to generate increases in present inflation, it is necessary to increase inflation expectations. However, inflation expectations have been declining since the initiation of the PSPP. 3. Some positive evidence from QE  It is true that there is some encouraging evidence mainly from the M3 growth and the banking sector, such as the growth rate of loans.