Of course, one reason for the low inflation rates is the recent large decline in oil prices. But even so, as is evident from the following graph (Graph 5), core or underlying rates of inflation are also below target almost everywhere.
So to summarise briefly, the current environment is one in which there has been a very large monetary stimulus, interest rates are very low and inflation is subdued. This is not exactly what the traditional textbooks would have predicted. Why do we find ourselves here?