ECB’s Makhlouf: Can Afford to Wait for Clearer Wage Developments

24 February 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Saturday said that the ECB could wait for more information on wages before deciding its next monetary policy move. 

In an interview with Bloomberg on the margins of the Informal Ecofin in Ghent, Belgium, Makhlouf, who heads the Central Bank of Ireland, said, ‘Wage growth may go in the wrong direction in the sense that there may be too much of a catch up.’

‘If I can, I prefer to take decisions based on a clear picture', he added. 'We can afford to wait.'

The decision to cut interest rates wasn’t dependent on 2% spot inflation, he said, but rather, the Governing Council needed to ‘feel that we’ve got enough information that tells us actually we’re going to hit 2% in a sustainable way.’

‘If the economy is still on a glide path, which we’re seeing at the moment, we won’t have to make rash decisions’, he said, reiterating he was ‘completely open-minded about the rate path.’

A broad-based recession wasn’t expected, he said.

‘My expectation is that we’re probably going to see a continuation of the slowdown in the first half of this year, but then a pickup in the second half — partly because the catch-up process of nominal wages will help consumption’, he said.