[SLIDE 6] Large scale asset purchases stimulate Large scale asset purchases stimulate both demand and inflation The two main channels of effect for large-scale asset purchases – often referred to in the literature – are the signalling effect and the portfolio balance effect.
[SLIDE 7] Signalling and portfolio balance effects of a large-scale… The signalling effect contributes to stronger anchoring of inflation expectations in line with the medium-term objective of price stability. This effect also contributes to reducing anticipated real rates. Depending on the monetary policy reactions in the rest of the world, the signalling can also put downward pressure on exchange rates.