For some time now, inflation continually has been weaker than expected and market-based measures of inflation expectations stand at their historical lows. Therefore, monetary policy has become increasingly accommodative relying on several non-standard measures and negative interest rate policy.
There is broad agreement that in the current setting there are limits to the scope of monetary policy actions and their effectiveness for lifting the Eurozone’s economy. Concerns are mounting that the outlook may be one of a prolonged period of low inflation and low interest rates, which can adversely affect both the real and financial sectors.