Way Is Clear for Rate Cuts, With Inflation and Wage Rises on Downward Trend, ECB's Lane Says

By Paul Hannon

The eurozone's inflation rate and the pace of wage rises are slowing gradually, paving the way for possible rate cuts after a first reduction in borrowing costs next month, the European Central Bank's chief economist said in an interview published Monday.

The ECB last week released figures showing that wages negotiated by labor unions increased more rapidly in the first three months of this year than in the last three months of 2023. That appeared to be a setback for the central bank, but Philip Lane told the Financial Times that a wider view of wage developments pointed to a continued cooling.

"Looking at the full detail, the overall direction of wages still points to deceleration, which is essential," he said. "So we are a step along this journey."

Write to Paul Hannon at [e-mail]

(END) Dow Jones Newswires

05-27-24 0146ET