Euro area inflation fell to 1.4 per cent in June, echoing the disinflationary trends seen in the US and UK. But at least of equal interest is the break-down in trade-off between inflation and unemployment. Compare the scatter below to its March equivalent and see an exceptionally flat and ‘noisy’ Philips curve. The explanatory power of the March line of best fit was 54 per cent, but this is now just 2 per cent.

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