In April, we concluded that cyclical wage growth should start to pick up, in both the US and the Euro area, and that structural downward inflation pressure could start to abate. In this follow-up, we believe that wage growth will rise further.
We also look into the relationship between wages and inflation and the possible inflation effects of an intensified trade war. The conclusion is that there are many upward inflation risks for the coming years.
We look at the following:
- The Phillips curve and why it is alive and kicking
- The link between wages and inflation
- Tariffs and their impact on prices
- Upward pressure on interest rates
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