ECB sees very strong wage growth in coming quarters as more hikes planned

Weaker economic growth is unlikely to help much in the near term, particularly as a shortage of skilled labor encourages businesses to retain workers and pay them well.

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. 

Even so, “looking ahead, wage growth over the next few quarters is expected to be very strong compared with historical patterns,” it said. “This reflects robust labor markets