This is a necessary precondition for inflation to move sustainably to levels closer to 2%. But although growth rates have converged recently, there are still large differences in living standards across euro area countries and, by some measures, they have even increased recently. To a large extent, these differences reflect the quality of national institutions.
And if inflation is rising and inflation expectations are getting out of control, the policy framework will tell you it’s time to tighten, and an independent central bank will have the means to do so. If twenty years ago Venezuela had embraced inflation targeting and central bank independence, today they would have low and stable inflation, not hyperinflation.