The US situation should be a warning to us: there is a risk that nominal wages will remain subdued even when pressures build up in euro area labour markets, because of low productivity gains. Incidentally, this is what we’re also seeing in Germany. For many years central banks have pushed very hard to boost inflation.
But despite the fact that they are still not satisfied with the level of inflation, the economy is doing very well. Can’t we be satisfied with that and be a bit more relaxed about inflation? I can understand why politicians may think that way, but as central bankers we can’t. Our mandate is narrow, and it is a price stability mandate.