If the sceptics were confounded by the governments’ determination and ability to meet the convergence criteria, they were equally wrong-footed with their predictions of chaos and havoc in financial markets upon the actual birth of the euro.
In its July meeting, the Governing Council announced that it expected the key ECB interest rates to remain at present or lower levels for an extended period of time. This expectation has been based on the overall subdued outlook for inflation extending into the medium term, given the broad-based weakness in the real economy and subdued monetary dynamics.