In this situation, euro area countries’ economic developments and credit risks diverged from each other, and the ECB’s monetary policy, which was already at that time accommodative to growth, was not transmitted evenly across the euro area. The repricing of sovereign risk hampered the functioning of markets and the transmission of monetary policy. Euro area financial markets became regionally fragmented and banks’ problems increased.
And, can we project how long our economy will be able to provide support to the rest of the world? Forecasts of inflation and of growth in real activity for the United States, including those of the Federal Open Market Committee, have been generally off for several years. Inflation has been chronically overpredicted and real GDP growth underpredicted.