IMF confident that a wage spiral will not unleash despite high inflation

this high rates Simultaneously rising inflation in many countries and labor markets showing signs of strength are fueling fears of an upward spiral in wages leading to an inflationary cycle. International Monetary Fund (IMF) is considered unlikely based on analysis of similar historical events.

In this context, the international organization has argued that there are three factors working together to contain risks, among which the shocks underlying inflation come from outside the labor market, falling real wages help reduce price pressures and central banks are aggressively tightening monetary policy.

Thus, consider this The restrictive measures taken by many central banks recently are “encouraging” and he hopes they will help prevent high inflation from holding onto and drifting off target for too long.

Because inflationary shocks originate outside the labor marketl, the fall in real wages helps curb inflation, and Money Politics hardens more aggressively, The chances of persistent price-wage spirals appear limited,” he concludes.

In this sense, the analysis of historical episodes with characteristics similar to the present “they didn’t tend to be followed by the spiral of wages and prices.”

In fact, the international institution suggests that inflation then tends to decline gradually on average, and nominal wages gradually recovered over several quarters.

Source: Informacion

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