Recent work by Ben Bernanke and Olivier Blanchard has examined the role of labour market tightness for the United States. [33] Their work suggests that unless the ratio of vacancies to unemployed workers falls back below its pre-COVID level, inflation is unlikely to return to target in the next three years.
This factor was taken into account in framing the fiscal forecasts for 2007 in the context of the last Budget. There were also important developments in the price of residential property last year. You may recall, at this time last year, that the Bank was very concerned about the reacceleration in house prices that had occurred.