In our case, output and unemployment are only considered at cyclical frequencies, using the same bandwidth and specification of the band-pass filter. Fig. 6 depicts the close comovement of underlying inflation deviation from the target with output and unemployment cycle (with a reversed sign to enhance readability). The strength of the comovement of key macroeconomic variables has important implications for business cycle interpretation in terms of demand versus supply shocks. Demand shocks, or shocks originating from the supply side and leading to increase in prices,are the likely explanations for euro area business cycles.