Inflation & Prices
IMF Sees Low Risk of Global Wage-Price Spiral From Rate Hikes
- Sector-based inflation, falling real wages help anchor views
- Economists analyzed 22 scenarios; none resulted in spirals
An office worker commuting to work in La Defense financial district of Paris, France.
Photographer: Nathan Laine/BloombergThis article is for subscribers only.
The International Monetary Fund sees limited risks of wage-price spirals worldwide as aggressive monetary tightening and falling real wages help anchor consumers’ expectations.
IMF economists led by John Bluedorn analyzed 22 scenarios in the past five decades where inflation and wages rose and the unemployment rate held low. None of the cases resulted in wage-price spirals, they found. In all instances, inflation eventually came down and nominal wages rose.