Thus, preventing the monetary policy stance from becoming excessively accommodative is important not only to directly preserve price stability, but also to avoid the emergence of financial imbalances that may – if they prevail for too long – eventually give rise to episodes of macroeconomic instability.
Moreover, the long-term success of non-conventional policies depends on the policy-maker’s ability to pull off a difficult balancing act: to provide massive stimulus to the economy in the short-term, while keeping long-term private sector inflation expectations firmly anchored. The failure to preserve the anchoring of long-term inflation expectations would be self-defeating for non-conventional policies.