Episode
Why Central Banks Are Watching the Wage-Price Spiral
- Published
- Jun 26, 2026
- Duration seconds
- 534
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Summary
In Episode 75 of Monetary Policy Explained with Fexingo, Lucas and Luna dive into the wage-price spiral — a concept central banks are monitoring closely in mid-2026. They use the current U.S. labor market as a case study, where the unemployment rate sits at 3.8% and average hourly earnings are growing at 4.2% year-over-year, while core PCE inflation hovers around 2.8%. Lucas explains the classic 1960s Phillips Curve logic, the breakdown in the 1970s, and why the relationship between wages and prices isn't as tight today. Luna pushes back on the assumption that tight labor markets automatically fuel inflation, citing productivity gains and anchored inflation expectations. The hosts also explore how the Fed's current 'data-dependent' stance reflects a new framework: watching wage growth in specific sectors like healthcare and leisure, not just the aggregate. A concrete, timely look at a debated policy pivot. #WagePriceSpiral #MonetaryPolicy #CentralBanks #FederalReserve #Inflation #PhillipsCurve #LaborMarket #WageGrowth #CorePCE #Unemployment #Productivity #Economics #FexingoBusiness #BusinessPodcast #MonetaryPolicyExplained #Podcast #Economy #Mid2026 Keep every episode free: buymeacoffee.com/fexingo