The economy was close to full employment and inflation as of the second half of 2016 had become -- and remained -- positive. The negative spillovers from monetary policies abroad during Regime 1 had disappeared by then. 7  However, although inflation remained positive from 2016 onward, it did not accelerate, and the link between QE and inflation appears to have become less clear.
The reason is that the link between the monetary base and the money stock as well as the link between output and the demand for money became less stable.