The eurozone’s real interest rate problem

While diverging real interest rates, that is, the interest rates after adjusting for inflation, are a common feature of a decentralised monetary union, fiscal, regulatory and monetary policy play an important part in counteracting their effects. But as long as eurozone fiscal and monetary policy does not change to support growth, and inflation remains very low as a result, real interest rates in the South will remain high – too high for a meaningful recovery.

ESO: Background information: Monetary policy decisions, July 2014 - ECB leaves rates on hold, waits for historic cuts to trickle down http://www.europeansources.info/record/monetary-policy-decisions-july-2014-ecb-leaves-rates-on-hold-waits-for-historic-cuts-to-trickle-down/

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