Benchmark
Europe’s Reform of Labor Could Hand ECB Even More Work to Do
Labor-market reforms under way in the euro area could end up slowing the shift to faster inflation
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The more euro-area economies engage in so-called structural reforms, the harder it may become for the European Central Bank to hit its inflation target.
It’s a counter-intuitive thought. After all, more competitive and more open economies should grow faster and so produce higher inflation. That’s why ECB officials – despairing of constantly pumping monetary stimulus into the financial system – are urging more reform.