As I will explain later, I think it is necessary to continue making efforts to raise the labor productivity growth rate, and there are good prospects for such efforts to bear fruit.
When we model the economy, the concept of a frictionless economy is represented, somewhat imperfectly, by a collection of interrelated and unobservable trends of key macroeconomic variables.4 These trends are the anchors around which we aim to stabilise the economy, and thereby inflation over the medium-term.