Inflation expectations play a key role in inflation projections. Different measures of inflation expectations point towards inflation remaining below the ECB's 2% target in the coming years.
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Is the euro area drifting into a liquidity trap (a combination of low interest rates and low inflation) as a consequence of the corona crisis? There is a heightened risk of this, but the policy measures taken are preventing negative trends.
Euro area inflation has been slow in recent years. The way slow inflation was explained before the crisis has been challenged.
Finland is now facing problems similar to those with which Japan has already struggled for more than a decade. The population is ageing and the public finances are moving deeper into debt.
Japan’s economy has so far been growing sluggishly, but the deflationary trend has been successfully cut and structural reforms taken forward.