A lack of convergence is revealed by the sustained differentials in inflation among the euro area’s member states. It is true that these differentials are fairly small in comparison to the first half of the 1990s. However, following a substantial convergence in the run-up to EMU, inflation differentials widened again.
Divergent economic developments are apparent in other currency areas, too, such as in the USA, without monetary policymakers being able to address this issue. Monetary policy has to be geared towards the data for the currency area as a whole. It cannot address regional policy problems.