The resultant “policy duration effect,” by working on expectations about future monetary policy, contributes to further stabilizing financial markets. Third, the Bank is making efforts to enhance the transmission mechanism of monetary easing. For instance, the Bank has already been expanding the types of money market operations.
In the same vein, monetary policy cannot be left alone in the effort to support the economic recovery; it must be complemented by an appropriate use of available fiscal space, with appropriately targeted, growth-enhancing measures, such as investment in infrastructure.