Euro Area Faces Low Inflation Crisis Despite Economic Recovery
Low inflation during economic recovery is due to incomplete recovery, with some countries in the euro area still experiencing slack. Factors like inflation expectations and wage growth have contributed negatively to inflation since 2014. The ECB needs to continue expansionary monetary policy until inflation reaches its target. Structural reforms may have slowed down the ECB's ability to reach its inflation goal quickly. Timing of reforms is crucial for fostering innovation and productivity.