Thus a medium-term inflation rate of somewhat below 2% over the medium term is the appropriate benchmark also at the national level. Unit labour costs, and therefore wage developments, after having taken due account of the labour productivity increases, need to be consistent with this.
BIS central bankers’ speeches  5  Moreover, using contemporaneous (or lagged) inflation as a benchmark for wages can lead to a nominal persistent spiralling of both wages and inflation over and above the average of the euro area. This would lead to a progressive loss of cost competitiveness. This is why central bankers are against wage indexation, particularly in a single currency area.