Generally, asset purchases are thought to provide a strong signal that policy rates will remain low for an extended period of time. For the ECB, this effect is reinforced by the sequencing of our instruments through which we have indicated that our policy rates will likely remain at their current levels “well past the horizon of our net asset purchases”.
Capital expenditure, which is the main instrument of the government’s investment programme to spur economic growth, reached $ billion and was slightly above levels recorded in October 2011 to May 2012. Unless government significantly picks up the pace of capital spending, its overall budgetary stance could prove only mildly expansionary at the end of the fiscal year, which is just three months away.