A number of options – of both a short- and longer-term nature – are being explored, including the provision of guarantees, credit enhancements of SME loan pools to revive structured credit markets over a longer time horizon; and third, purchases of asset-backed securities (ABS) by the Commission and the EIB.
As the real economy improves due to such stimulus, the actual inflation rate will rise, which will lead to a further rise in inflation expectations: such a virtuous cycle can be expected to operate. Is such a mechanism actually at work? So far, the QQE has been steadily exerting its intended effects.