Conference on ‘Low Inflation and Wage Dynamics: Implications for Monetary Policy and Financial Stability’

The broad recovery in advanced economies in recent years has been accompanied by persistently weak nominal wage and price dynamics. The aim of the conference is to foster the debate on a number of related issues. Has a structural break occurred in the relationships between cyclical conditions, wage dynamics and inflation? If a break has occurred, what factors, be they domestic or global, are responsible for it? Does the observed low wage dynamic signal a decline in the NAIRU or does it reflect the inadequacy of standard measures of unemployment to fully capture the current labour market slack? To what extent is the effectiveness of monetary policy affected by structural changes in the relationship between inflation and economic slack? Are changes in the monetary policy framework warranted, given the risks to price and financial stability posed by persistently low inflation and the presence of an effective lower bound on the policy rates?.