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Central Banks

ECB Sees ‘Very Strong’ Wage Growth Ahead as More Hikes Planned

  • Robust labor market, high inflation fuel generous pay deals
  • Policymakers flagged at least two more half-point hikes ahead

The European Central Bank predicts wage growth — a key indicator of where inflation is headed — will be “very strong” in the coming quarters, strengthening the case for more interest-rate hikes.

A study of salary developments since the start of the pandemic shows underlying pay growth has been “relatively moderate” and is currently close to its long-term trend, the institution said Monday in an article to be published in its Economic Bulletin