BIS central bankers’ speeches  supporting the upward inflationary trajectory for euro area inflation back towards our aim of below but close to 2%. III. Re-integration of financial transmission  Another possible condition for a situation of sustained disinflation is that monetary policy losses traction over the economy in the presence of disrupted transmission mechanisms.
The second question is, “Did this expansionary monetary policy cause a part of the housing boom in 2004 and 2005?” Again, the answer from the VAR model is “Yes”. Putting the two answers together, we see that easy monetary policy prompted by the perceived risks of deflation between 2002 and 2004 contributed to the housing boom in the years thereafter.