While real interest rates continued to decline due to the policy effects of QQE at the time of its introduction, there was no significant change in the outlook for real income. Therefore, a monetary easing effect emerged – that is, the bringing forward of future consumption.
The terms of the new instruments involve some sacrifice by all bondholders, as Government seeks to balance the fiscal imperatives, including anchoring the BERT programme through a reduction in the debt-to-GDP ratio to 60% by 2033, against the need to preserve financial stability and protect the long-term interests of small bondholders.