The explanation for the time lag before this has become visible could be that it takes time to learn the new technology and to reorganise the company in order to benefit from the advantages in terms of increased productivity from earlier investments. If the strong productivity growth proves to be permanent, it means that the economy can grow at a more rapid rate without inflation accelerating. One question concerns the consequences of the poor employment situation and strong productivity growth for the outcome of wage negotiations and wage developments as a whole. If the labour market is functioning efficiently, the weak labour market situation should result in modest wage increases. Unfortunately, we know that, historically, this has not always been the case. The good productivity growth may also make it difficult for firms to withstand higher wage demands. It could become particularly worrying if the wage negotiations assume that the improvement in productivity is permanent and it later begins to decline again. It now looks as though recent wage developments may have been calmer than expected. In the December Inflation Report we made a downward revision to the forecast for unit labour costs in the business sector for all three years covered by the forecast. This was because of the slightly lower rate of wage increases and a slightly more favourable development in productivity. The question of whether there is motivation for a further adjustment in the same direction is one that will be discussed at our monetary policy meeting in February.

SPEECH  Considerations on the Road Ahead for Monetary Policy Implementation June 02, 2022 Lorie K. Logan, Executive Vice President Remarks at the New York Fed and Columbia SIPA Monetary Policy Implementation Workshop, New York City As prepared for delivery  Good afternoon. It is a pleasure to speak with you today at the New York Fed and Columbia SIPA workshop on monetary policy implementation. Many of you have attended these workshops in the past, and it is great to be together again to talk about issues of essential importance to policy implementation. It is also nice to see so many new participants, reflecting the broad interest and engagement in the topic of digital innovation. Over the past two days, we heard about faster forms of payments and new, digital forms of money—both private and public—and the effects they might have on money markets, policy implementation frameworks, and the international landscape. Digital innovation in money and payments is occurring for a reason—consumers, businesses, and financial market participants can benefit from around-the-clock, faster, and possibly programmable payments, both to reduce risk and to simplify financial transactions. Increased competition that results from new forms of money and payments could lower costs, increase service availability, and stimulate further innovation. Harnessing the benefits of innovation to consumers and businesses, while maintaining a safe and effective monetary system, may require new legislation, changes to regulations and to supervisory approaches, and modernization of traditional payment systems. The specifics of the appropriate initiatives will vary by country.