Forward guidance can help QE succeed, Finnish research says

Asset purchases in eurozone can emulate those in the United States

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European Central Bank

The Federal Reserve's experience with quantitative easing (QE) shows that Europe can avoid falling into a deflationary scenario similar to that experienced by the Japanese, according to research in the latest Bank of Finland bulletin.

Is the euro area at risk of Japanese-style deflation?, by Tomi Kortela, notes that for QE to be successful "it must be credible", meaning the central bank must convince the public it is willing and able to act.

Part of this is forward guidance. "It also seems

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