Furthermore, also those indirect measures of inflation expectations extracted from asset prices, like the “break-even” inflation rates that are calculated from the yields offered by nominal and inflationprotected bonds with the same maturity present some limitations. In particular, several premia, like an “inflation risk premium” but also a “liquidity premium,” are potentially embodied in their calculation.
Confronted with a declining equilibrium interest rate and the effective lower bound on policy rates, we had to resort to unconventional monetary policy measures in order to provide the necessary accommodation to support domestic demand, thwart the deflationary risks which were emerging in 2014 and prepare the way for inflation to return to our objective.