It is affected by what happens elsewhere in the world, and by its own internal dynamics, including the decisions of its policymakers. Swings in China’s economic performance are increasingly affecting Australia’s economy and that of the region – and the world.
All of this meant that the outlook for the euro area economy as a whole was increasingly fragile. The disruption of the monetary policy transmission due to financial fragmentation is something deeply profound. It threatens the single monetary policy and the ECB’s ability to ensure price stability.