Philip Lane, Member of the Executive Board and former Governor of the Central Bank, highlighted in a recent blog post that the flexibility embedded in the PEPP has reduced the risk of fragmentation, a key issue in the euro crisis, by frontloading asset purchases and targeting them to where they are most warranted.7 These significant actions of governments and of central banks – have been critical in stabilising our economies.
Although Japan has experienced prolonged deflation that is unprecedented among major economies, its unemployment rate has remained very low relative to other economies and the employment situation has shown outstanding stability. In the United States, on the other hand, employment has fallen but declines in wages and prices have remained quite limited amid economic deterioration.