Asymmetric effects of conventional and unconventional monetary policy when rates are low

We study asymmetric inflation effects of both conventional and unconventional monetary policy in the euro area during the period of low nominal interest rates. We find that rate cuts are inflationary also during low interest rates. Positive quantitative easing surprises have a deflationary effect, but negative quantitative easing surprises have no inflationary effects. This result may be explained by information effects. The effect of monetary policy depends on the size of policy surprise and is lower during recessions than during booms. We also provide evidence that interest rate policy, forward guidance and quantitative easing are complementary to one another.