Italy is still not really knocking it out of the park but doing a little better than expectations, and France actually surprising to the upside a little bit. Do you think that tells us now that the periphery economies and France are as competitive as Germany?
The first of these is that monetary policy is generally committed to the objective of domestic price stability, whether in the context of a formal “inflation targeting framework” or not. If rates must be raised for macroprudential reasons when inflation is under control, then the inflation target may be undershot. Some worry that this could undermine the credibility of the whole regime.