Before the financial crisis, a standard assumption [I subscribed to] was that the Southern peripheral countries were on a path converging their income per capita to Northern levels, and as such, through Balassa-Samuelson effects, experiencing faster inflation. The Balassa-Samuelson effect describes how increases in traded-goods-sector productivity in the South bids up the price of non-traded goods their, relative to abroad.
For the conservative North that was uncomfortable with the 2 per cent inflation target [hence ‘below, but close to’ in the ‘clarified’ wording] this was fine, since it meant that hitting 2 per cent inflation in aggregate in the Eurozone would imply <2 per cent for them.
However, after the crisis, history in the South looks rather different. The price of non-traded goods was bid up not by durable increases in productivity, but by excessive domestic demand, borrowing against future income that was not going to arrive, facilitated by spreads that were too low, ex post. The South has been embarking on a protracted and painful internal devaluation.
The political economy of the aggregate 2 per cent target is now not so favourable to the North, since it means Northern inflation has to average >2 per cent to hit the target while this devaluation is going on. Lo and behold, the aggregate inflation target is persistently undershot.
I think there are less conspiratorial reasons for the persistent large undershoot of the target: the effect of the debt overhang on equilibrium real rates, and the zero bound. But the political economy problem sketched here is intriguing.