What the ECB is forced to say to ensure that its current policy is acceptable and justifiable

The ECB has decided to maintain a very expansionary monetary policy , even though growth has picked up in the euro zone and the unemployment rate has been falling steadily since the start of 2014. To justify this policy, the ECB is forced to make two assumptions: The correlation between the economic cycle and inflation still exists, and it is then possible to bring core inflation back towards the inflation target by stimulating activity; There is no unemployment hysteresis in the aftermath of the 2008-2009 crisis ; structural unemployment in the euro zone is therefore not higher than before the crisis, and it is therefore effective to continue to stimulate demand to lower unemployment. B ut if, on the contrary, the link between unemployment and inflation has disappeared and if structural unemployment is higher than before the crisis, i.e. close to the current unemployment level, it is pointless to continue to conduct an expansionary monetary policy. Unfortunately, both of the ECB’s assumptions seem inconsistent with recent observations.