On the other hand, the “adaptive formation mechanism” points to the view that the inflation rate will continue to be around the current level. For instance, if the observed inflation rate has been around 0 percent, people believe that the inflation rate will be around 0 percent going forward.
2 Economic situation and monetary policy The current economic situation of the euro area is quite good. The upturn has stabilised. With a macroeconomic growth rate of 1.7%, GDP in 2016 actually grew more quickly than euro-area production capacity; the output gap is gradually closing.