ECB Maintains Restrictive Monetary Stance Amid Euro Zone Wage Growth Slowdown and Inflationary Pressures

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

As Euro zone wage growth is projected to slow next year, according to ECB chief economist Philip Lane, the European Central Bank (ECB) will maintain a restrictive monetary stance due to the strong inflationary pressures. This comes after ECB President Christine Lagarde recently cut rates for the first time since 2019, with further cuts suggested as a possibility.

Lane emphasized that uncertainty and high price pressures necessitate caution in future decisions. While markets predict only a few rate cuts in the coming months, the ECB is not committing to any specific policy easing beyond its 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 expected to slow down next year and contribute to a projected decline in inflation. Additionally, corporate profit margins are expected to shrink, offsetting some of the wage increases and easing pressure on consumer prices.

Despite economic growth improvements, there is no immediate 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.

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