*  *  *  Summary In the context of a certain disconnect between economic performance and inflation the monetary policy response has to be carefully considered and precisely designed. We are not resigned to allowing inflation to remain too low for too long. But to understand “what is too low for too long”, we need to answer two questions.
First, why is inflation so low? Second, once we have a decomposition of inflation, we can ask: how likely is it that it persists over the medium-term? Falling commodity prices have accounted for around 80% of the decline in euro area inflation since late 2011.