In particular, quantitative easing, or QE, which affected the entire yield curve. Aren’t interest rates gradually eluding market participants’ expectations, leading them to wonder what sort of market equilibrium will exist at these rates? What constraints could affect the ECB’s decision-making? Isn’t this a strong driver of cycles and uncertainty?
Market participants can see the benefits of central banks managing the yield curve, because it fosters economic activity and stability. It is true that part of how interest rates are set is eluding market mechanisms. Nevertheless, we have to put this discussion into perspective. On the one hand, it’s nothing new: by design, monetary policy always has an impact on interest rates.