Prior to monetary union, every country’s fiscal policy was judged by the markets, and if it was inadequate, adverse market reactions in terms of exchange rates and interest rates were to be expected. However, in monetary union a potential “market risk premium” is spread across the whole euro area - with the exception of perceptible but relatively narrow spreads in longterm bonds.
The year-on-year rate of increase in the consumer price index (CPI) for all items less fresh food slowed temporarily in early spring 2018, but it has been accelerating again since summer, having risen to around 1 percent recently.