Large balance-of-payments imbalances had been built up, with Germany and the Netherlands running surpluses of around 5% of GDP and the so called peripheral countries reporting deficits of 5% of GDP or more. The current account deficits were a signal of major structural imbalances, such as in public finances. When investors became reluctant to finance the deficits, the debt crisis unfolded.
Inflation Expectations and the Conduct of Monetary Policy To put it simply, inflation expectations are people's outlook for prices, or their perception of future price developments.