ECB’s Lane: Wage Declaration Gives Confidence in Returning to Target

29 August 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Executive Board member Philip Lane on Thursday said that wage deceleration in the euro area boosted the ECB’s confidence in the restoration of price stability.  

Speaking at the Central Bank Research Association (CEBRA) Annual Meeting in Frankfurt, Lane said, ‘Basically they're [the charts] saying is that the [wage] catch up is peaking now. It's going to move quite significantly next year and the year after to a much lower rate of wage increase. And this is where the confidence in returning to target comes from.’

This level of confidence was also based on the survey of professional forecasters, he said.

‘The impact of a tight labour market on wages is really low, according to these surveys’, he said.

Inflation had been decelerating, despite wage pressures, he said.

‘[T]here’s been a lot of progress in terms of various measures of underlying inflation, but those measures are connected to slow-moving labour factors still remaining high’, he said. ‘When people say, "Is inflation sticky?", I think it's more nuanced than that.’

Barring new unexpected shocks, the risks to inflation were either in the past or would dissipate, he said.

‘[W]hat we've seen is, behind what looks like a relatively stable services inflation, there is a kind of a transmission of the wave’, he said.