At the heart of this accommodative strategy is undoubtedly the fact that the ECB has steadily cut the interest rate on the main refinancing operations to its lowest possible point in recent years. However, the still existing functional deficits of the financial markets are hindering an optimal transmission of the monetary policy signals coming from this very low interest rate.
Small and medium-sized enterprises in particular still aren’t feeling enough of the monetary policy accommodation. We call this an impaired transmission mechanism.