Well-anchored inflation expectations are critical for giving the Fed the latitude to support employment when necessary without destabilizing inflation. 18 But if inflation expectations fall below our 2 percent objective, interest rates  See, for instance, Blanchard, Cerutti, and Summers (2015).
The diversity of the euro area is one of its greatest assets, but it also poses challenges for policymakers. One of these challenges is the threat of financial market fragmentation that can impair the transmission of monetary policy. I have argued that the responses to past crises have contributed to reducing these risks.