How could it go so wrong? Here is where the euro area’s unique institutional set-up comes in. The euro area teams up one common monetary policy with 18 national fiscal and economic policies. This approach reflects a currency area composed of sovereign member states.
Against this background, the output gap has improved steadily, and corporate profits have marked record highs. The labor market is very tight, at virtually full employment (Chart 6). On the price front, annual CPI inflation excluding fresh food and energy has been positive as a trend for about four years.