In the labour market, the elasticity of labour supply during the recovery has been greater than assumed in our baseline scenario. This can be partly attributed to pension and labour market reforms as well as to migratory flows. Increased labour supply has resulted in muted wage dynamics, thereby keeping a lid on underlying price pressures.
Overall, the uncertainty surrounding the upward path in inflation that we consider in our baseline scenario is still too high. Experience demonstrates the importance of our third criterion, resilience. Monetary policymakers always face a delicate balancing act at turning points in monetary policy.