Is one policy rate appropriate for all of the euro-zone?

For most of the time since the euro was established, the ECB’s “one size fits all” interest rate policy was a major problem for the single currency area. It contributed to imbalances between countries in the 2000s and to a prolonged downturn in peripheral countries in the 2010s. At present, however, there seem to be no major differences between the appropriate interest rate in the four largest euro-zone economies.

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