For example, as our purchases lower the yield on five-year government bonds, this is being reflected in cheaper fixed-rate mortgages. QE can also send a signal that our policy interest rate is likely to remain low for a long period. By giving more certainty about the path of short-term interest rates, this can help lower longer-term borrowing costs for households and businesses.
The Bank is also buying private assets, including corporate bonds. We started these purchases of corporate bonds because of strains in this market. To date, purchases have been limited, but market conditions have improved. This type of program also provides stimulus by providing liquidity, helping to narrow the difference between corporate and government bond yields.