But if wage increases were to move materially and persistently above the levels of productivity gains and inflation, businesses would likely pass those increases on to customers, a process that could become the sort of “wage–price spiral” seen at times in the past. 10 Today we see little evidence of wage increases that might threaten excessive inflation (figure 6).
Monetary policy framework, however, is a continuously evolving process contingent upon the level of development of financial markets and institutions, and the degree of global integration. As long as the value of money was linked to gold or silver, monetary policy had a secondary role.