The importance of monetary policy for the current ultra-low interest rates is often over-estimated. As emphasised by ECB President Draghi himself, monetary policy cannot determine long-term rates directly, and its influence on long-term real rates is even more limited and indirect.

Moreover, long-term bond yields have fallen to unprecedented low levels throughout developed countries. The influence of any single central bank on bond yields in its currency area must be quite limited if global capital markets are integrated.

The importance of the ECB’s policy in driving down rates in the euro area is widely assumed to be substantial. But even the ECB does not attribute more than a one percentage point decline in rates to QE. The author of this study believes that the impact of QE has been much smaller, due to the state of global markets.

It is widely accepted that a sudden reversal of rates to ‘normal’ would pose a threat to financial stability, but few believe that this is likely to materialise any time soon.

Daniel Gros is Director of CEPS.