Franz Says Wage Increases Must Be Moderate, Osnabruecker Says

Wolfgang Franz, head of German Chancellor Angela Merkel’s council of economic advisers, said in the absence of inflation dangers, wage increases should remain moderate to encourage job creation, Neue Osnabruecker Zeitung reported, citing an interview.

While price developments for imported commodities are “worrisome,” core inflation is running at about 1 percent, Franz said. That means there’s no overall inflation danger, he said.

“It is now crucial that higher commodity prices don’t cause second-round effects because then, the European Central Bank would probably react with a more restrictive monetary policy,” Franz told the newspaper.

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