ECB’s Patsalides: Euro Area Domestic Price Pressures Still Strong, Wage Growth Elevated

18 June 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Christodoulos Patsalides on Tuesday that euro area domestic inflation was still strong and wage growth high.

Patsalides, who heads the Central Bank of Cyprus and was speaking at the Annual General Meeting of the Cyprus Banks Association, said of the ECB’s 6 June decision to cut interest rates by 25bp, ‘After nine months of holding interest rates steady and in line with our updated assessment of the outlook for inflation, underlying inflation dynamics and the strength of monetary policy transmission, this decision was deemed appropriate.’

Inflation prospects were now much better than last September, while financing conditions were still tight, he observed.

‘At the same time, however, domestic price pressures in the euro area remain strong, the pace of wage growth is elevated and inflation is likely to remain above target for much of next year as well’, he said.

The Governing Council would thus adhere to its meeting-by-meeting approach ‘to determine the appropriate extent and duration of the accommodative change in monetary policy in light of incoming economic and financial data, and without any prior commitment to a specific course of interest rates’, he said.