But improving price competitiveness through wage restraint is, naturally enough, also dampening domestic price pressures. This factor is euro area-specific. But price pressures have been subdued in other countries, too, in spite of very low unemployment rates. It seems that global factors are affecting inflation as well.
Research at the Bank for International Settlements suggests, for example, that greater labour market contestability as a result of global value chains are putting a lid on wages and thus price pressures.1 Given the rather subdued inflationary pressure at present, an accommodative monetary policy stance remains appropriate in the euro area.