This paper presents a theory of the backward-bending Phillips curve. There is a minimum unemployment rate of inflation … which offers a policy alternative to the non-accelerating inflation rate of unemployment. Nominal wages are downwardly rigid … effected by increases in the general price level, a variable outside individual firms' control. This is why inflation 'greases …

below the ECB’s inflation target. Therefore, a readjustment of the infl ation target seems unjustified. Furthermore, as the … ECB can expect inflation to return to its target, it possibly can accelerate tapering its unconventional monetary policy …