You’ve alluded to the hot periphery, you have a laggard Italy, yes, things have looked a little better in the last 12 months or so, but how, from your position as president, and your colleagues at the European Central Bank, how are you managing these divergencies? And how concerned should we be about them? JCT: Several observations.
The result was that import prices receded, acting as a brake on the general price trend. The euro experienced no such strong appreciation during the crisis. Second, deflation requires that nominal wages fall – or at least expand at a slower pace than productivity – over a protracted period of time.