Of course, it is still early in the recovery from the pandemic and the effects on the labour market in the longer-term remain to be seen. Despite the uncertainties around the economic outlook, we do expect to see the labour market tighten. This should result in stronger and broader-based wage growth than we have observed in recent years.
In October 1998, the Governing Council announced a quantitative definition of price stability, which was defined as “a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%”. That was interpreted as a range between 0 and 2%, and the main focus was on combating too high inflation.