Second, by stating that domestic policies are likely to differ from those elsewhere, forward guidance has insulated euro area financial conditions from external shocks that would have resulted in an unwarranted tightening9 and facilitated nominal exchange rate adjustments consistent with different monetary conditions, which themselves reflect different circumstances.
Third, it has been a source of additional monetary policy accommodation at a time when the room for cuts in key policy rates has been very limited. Let me explain this last point in more detail, referring back to our forward guidance on the APP.