Inflation will gradually recover in the euro area

Although euro area growth has been strong and its unemployment rate has been falling, inflation has yet to pick up. In the past, inflation tended to have a negative correlation with unemployment, known as the Phillips curve. However, in the current phase of the recovery this relationship seems to have weakened, even to the point of disappearing entirely. Nevertheless, as we will see, there are signs that the Phillips curve has not died and that the low inflation recorded over the past few years is transitory. For greater insight into...

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