We have to look at the labour market to determine whether inflation is returning, but also at the goods and services market

Core inflation is low in the United States and the euro zone, while the pressure on the labour market is significant. So we could expect inflation to return, which would change the outlook for monetary policies. But the following conditions must be met for core inflation to rise: The fall in unemployment must lead to an acceleration in unit labour costs ; the Phillips curve effects must therefore be sufficient; But also, which we should not forget, the situation of the goods and services market must enable companies to raise their prices (companies’ pricing power must be sufficient). If domestic or external competition is strong, and if the cyclical situation deteriorates, companies cannot raise their prices, even if unit labour costs accelerate. Currently , in the United States, unit labour costs are not accelerating; in the euro zone, unit labour costs are accelerating, but not prices.