However, some of the resulting wage and price pressures could subsequently ease as higher real wages draw workers back into the labor force and lower long-term unemployment.19 As a consequence, tightening monetary policy as soon as  19  See Rudebusch and Williams, “A Wedge in the Dual Mandate”, in note 17.
BIS central bankers’ speeches  7  inflation moves back toward 2 percent might, in this case, prevent labor markets from recovering fully and so would not be consistent with the dual mandate. Inferring the degree of resource utilization from real-time readings on inflation is further complicated by the familiar challenge of distinguishing transitory price changes from persistent price pressures.