Thus, the current stance of monetary policy appears to be consistent with actual economic growth modestly outpacing potential growth and further improvements in the labor market.4 Looking beyond the near term, I anticipate that growth will also be supported by a lessening of some of the headwinds that continue to restrain the U.S. economy, which include weak foreign activity, dollar appreciation, a pace of household formation that has not kept up with population and income growth and so has depressed homebuilding, and productivity growth that has been running at a slow pace by historical standards since the end of the recession.
Europe won’t find a way out of the low-interest-rate environment for good if we just point our finger at the central bank. Returning to a sustainable path of stable growth and stable prices will require others to make an effort, especially the governments of the euro-area countries.