Although average hourly earnings are rising only about 2.5 percent per year, slower than before the crisis, much of that downshift may reflect the slowdown in productivity growth we have experienced. For example, over the past three years, unit labor costs-that is, nominal wages adjusted for increases in productivity--have been generally rising a bit faster than prices.
For central bankers, the ultimate price of a stable financial environment is a low rate of inflation -- a rate that, in the words of Alan Greenspan, will have no material effects on the macroeconomic decisions of consumers, investors, traders, producers and all other participants in total economic activity.