The European Central Bank (ECB) will need to see proof of slowing wage growth in the euro zone before interest rates can be lowered, ECB governing council member Klaas Knot said on Sunday.
“We now have a credible prospect that inflation will return to 2% in 2025. The only piece that’s missing is the conviction that wage growth will adapt to that lower inflation”, the Dutch central bank governor said in an interview with Dutch TV program Buitenhof.
“As soon as that piece of the puzzle falls in place, we will be able to lower interest rates a bit.”
ECB labour costs since 2009 (which is as far back as their data goes) shows different.
It clearly show year on year growth except for a dip in 2021.
It shows dips in 2009, 2011, 2012, 2015, and the pandemic.
Now compare that to ECB’s report on unit profits where only twice (2009 and pandemic years) did profits dip … and in fact in 2022-23 profits have risen dramatically.
Workers have always been short changed and these stats show it.
Slower growth is not a stagnation.