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Doe low rates necessarily cause wage inflation? It might cause inflation in the price of assets or goods while wages stay steady.
by bbcbasic 10y ago
Doe low rates necessarily cause wage inflation? It might cause inflation in the price of assets or goods while wages stay steady.
- micahbright 10y agoWhy would the price of labor be treated any differently than any other price. In general, inflation is more dollars chasing less goods and services(where services includes, but is not limited to, individual labor of any sort). To be fair to your question, inflation does not necessarily mean any individual price will rise, but all of them generally more or less. For example, market forces may cause the price of labor to decrease while most other prices are increasing.
- bbcbasic 10y agoProduct inflation could be caused by exchange rate changes, increasing the price of imported goods for example. Low interest rates could funnel more into asset prices than it does to wages. Wages can be competing with foreign labour, automation etc.