Like in a marathon, the second half of the course always feels tougher than the first – and one major challenge is to not give in to the growing reform fatigue. But at this point, the weaknesses in EMU’s architecture probably pose a more fundamental challenge. The balance between liability and control has got out of kilter.
Domestic cost pressures are strengthening amid high levels of capacity utilisation and tightening labour markets. So against this background, the Governing Council carefully reviewed the progress towards a sustained adjustment in the path of inflation to levels below, but close to, 2% in the medium term. Our assessment on the progress made was guided by the three criteria of convergence, confidence and resilience.