By David Barwick – FRANKFURT (Econostream) – European Central Bank Executive Board member and chief economist Philip Lane said Thursday that euro area wage growth had not shown a noticeable acceleration, suggesting that the latest inflation increase had yet to generate significant second-round effects.

Speaking at the Société Générale Global Markets Conference in London, Lane said the ECB had not detected “any noticeable pickup” in wages.

He said the distinction for policymakers was between pay increases intended to recover purchasing power lost to higher prices and wage demands reflecting an expectation that inflation would remain persistently above target.

“Are the wage settlements reflecting catch-up, or do workers also expect inflation not to return to target and are adding in extra wage demands?” Lane said.

Lane contrasted the current environment with 2022, when strong corporate profitability had been clearly apparent to employees and had contributed to larger pay demands.

“It was entirely visible to workers that firms were making large profits,” he said.

He said current conditions were less conducive to aggressive wage claims, citing softer demand and greater uncertainty over employment prospects, including concerns related to artificial intelligence and competition from China.

Lane also said fiscal policy was likely to provide less support to euro area activity from 2027, reducing one source of upward pressure on both growth and inflation.