In most industrial countries, inflation is now very low by historical standards. Although vigilance is required to safeguard the progress that has been made, the medium-term goal of price stability appears to be within striking distance for many countries (Box 2). In contrast, the persistence of unsustainably large fiscal imbalances remains a critical obstacle to stronger growth and to greater stability in financial and foreign exchange markets. Much also remains to be done to eliminate structural impediments to saving and investment and to improve the functioning of labor markets, especially in Europe.
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