6  See Richard Mattoon and Leslie McGranahan (2008), “Revenue Bubbles and Structural Deficits: What’s a State to Do?” Working Paper No. 2008–15 (Chicago: Federal Reserve Bank of Chicago, July); and David L. Sjoquist and Sally Wallace (2003), “Capital Gains: Its Recent, Varied, and Growing (?) Impact on State Revenues,” State Tax Notes, August 18.
Against this background, we expect the current episode of extremely low or negative inflation rates to be short-lived and price stability to be maintained over the medium term, thereby continuing to support the purchasing power of euro area households. As the transmission of monetary policy works with lags, our policy action should progressively feed through to the economy in full.