ECB’s Philip Lane Predicts Slower Wage Growth in Eurozone but Maintains Restrictive Monetary Stance

Lane says ECB must continue to restrain economy: WTAQ News Talk报道 | 97.5 FM · 1360 AM

As predicted by ECB chief economist Philip Lane, wage growth in the Euro zone is expected to slow down next year. Despite this, inflationary pressures remain strong enough for the European Central Bank to maintain a restrictive monetary stance. The ECB recently cut interest rates for the first time since 2019, with ECB President Christine Lagarde suggesting further cuts may follow.

Lane emphasized that the high level of uncertainty and elevated price pressures necessitate a cautious approach. While markets predict only a few rate cuts in the coming months, the ECB is not committing to any specific policy easing beyond the recent rate cut. Future decisions will be data-driven and made on a meeting-by-meeting basis.

Wage growth, which is currently high due to firms adjusting wages in response to past inflation, is projected to slow down next year. This will contribute to a decline in inflation as anticipated by Lane. Additionally, corporate profit margins are expected to shrink, offsetting some of the wage increases and easing pressure on consumer prices.

Although economic growth has improved slightly, there is no imminent threat of increased price pressures as demand in interest rate-sensitive sectors remains subdued. The ECB will continue to monitor economic data and make decisions accordingly to ensure stability in the euro zone.

Despite concerns about slowing wage growth and rising inflationary pressures, Lagarde maintains that “the ECB will continue its prudent monetary policy stance” and avoid taking reckless actions that could have negative effects on financial stability in Europe.

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