Central Bank Balance Sheet Policies and Inflation Expectations

Jan Willem van den End, Christiaan Pattipeilohy

Research output: Contribution to JournalArticleAcademicpeer-review


We analyse the empirical effects of credit easing and quantitative easing on inflation expectations and exchange rates. Both monetary policy strategies are summarised in measures for composition and size of the central bank balance sheet and included in a VAR model. The empirical results show that changes in balance sheet size had positive effects on inflation expectations in Japan, while the effects where negligible in the euro area. By contrast, an increasing balance sheet size is associated with reduced short-term inflation expectations in the US and UK, pointing at negative signalling effects. Shocks to balance sheet size or composition have no substantial effects on long-term inflation expectations in the euro area, US and UK. An expanding balance sheet size is associated with an appreciation of the US dollar and a depreciation of the euro, pound sterling and Japanese yen.
Original languageEnglish
Pages (from-to)499-522
Number of pages24
JournalOpen Economies Review
Issue number3
Publication statusPublished - 1 Jul 2017
Externally publishedYes


  • Central banks and their policies
  • Monetary policy


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