The ECB is Fiddling While Europe Burns

Matt Yglesias points us to the latest forecast from the European Central Bank. It’s pretty horrifying. They’re projecting a eurozone economy that’s barely growing at all in 2012:

  • Unemployment = 10.1%
  • Real GDP growth = 0.5%
  • Domestic demand growth = 0.3%
  • Output gap = -2.2%

And inflation that’s extremely well controlled:

  • Inflation = 1.6%
  • Compensation growth = 0.4%

Question: Is the ECB acting like a central bank that thinks its economy is flatlined and inflation shows no signs of being a problem? It sure doesn’t seem like it, does it?