First, a period of higher volatility is a phenomenon that is frequently observed not long after the start of a large quantitative programme, when short-term rates are pressed against their lower bound. Price discovery is gradual and complex in a world in which central banks intervene in long-dated securities and markets re-appraise prospects for the macro-economy in exceptionally uncertain conditions.
Second, and notwithstanding these developments, financial market conditions remain accommodative and supportive of the economic recovery in the euro area. For example, given the amount of accommodation that was introduced even before our expanded asset purchase programme commenced in March, bank lending rates – a key indicator of financing conditions in the euro area – are still trending down.