ECB's Smets Is Watching Wages, Inflation Expectations

The transcript discusses the importance of monitoring inflation and wage growth in monetary policy meetings. It highlights the need to understand domestic inflation dynamics and the factors affecting wage growth, such as labor supply, migration, and flexible labor contracts. The backward-looking nature of wage formation and its impact on inflation is also examined, emphasizing the goal of achieving a self-sustained inflation path.

What are some potential reasons for the development of more flexible labor contracts?

What role does internal wage growth play in achieving inflation objectives?