MNI BRIEF: Less Growth, Infla Without ECB NIRP, QE, FG - Study

Annual euro area GDP growth in 2019 would have been 1.1% lower and inflation 0.75% lower had it not been for the European Central Bank's combined use of negative interest rates, forward guidance and asset purchases, a paper published by the ECB Tuesday concludes. The unemployment rate, however, would have been 1.1% higher.

The 10-year euro area average sovereign yield is estimated to have been compressed by more than 200 basis points since 2015 as a result of quantitative easing, ECB Director General of Monetary Policy Massimo Rostagno, Carlo Altavilla, Giacomo Carboni, Wolfgang Lemke, Roberto Motto and Arthur Saint Guilhem argue. Negative interest rates had a sizeable influence on the sovereign yield curve across maturities, while the impact of forward guidance on key interest rates was more subdued.