Euro Area Inflation Differentials Threaten Financial Stability, ECB Urged to Act
Inflation rates can vary between different regions in countries like the euro area, US, Canada, Japan, and Australia. These differences can be due to various reasons like price convergence, economic distortions, or market segmentation. The European Central Bank may not be able to control these differences with its usual tools, but unconventional policies can help. It's important to keep average inflation close to two percent to prevent deflation in some areas, which could harm financial stability.