Monetary policy interventions have distributional effects across the population depending on the composition of the assets and liabilities of households. One could argue that monetary policy is in essence distributional in the intertemporal dimension and the euro area crisis has uncovered distributional effects of monetary policy in the spatial dimension.
However, activity is expected to continue to be dampened somewhat by the process of balance sheet adjustment in various sectors. In the Governing Council’s assessment, the risks to this economic outlook remain broadly balanced in an environment of elevated uncertainty. On the one hand, global trade may continue to grow more rapidly than expected, thereby supporting euro area exports.