ESRI: Avoiding 'wage-price spiral' may help keep ECB away from aggressive rate hikes

Potential 'silver lining' that may persuade the ECB to increase rates less aggressively than the US and UK is that wages are growing more slowly than inflation in the eurozone

The ESRI is sticking to an earlier forecast that Irish consumer price inflation — which is running at 7% — will peak at just over 8% in the summer, before easing to 6.7% for the year as a whole. File picture: Larry Cummins

Moderate levels of wage increases in the eurozone may yet help keep the lid on the ECB moving aggressively to hike interest rates to control inflation this year, a leading Irish economist has said.                     

Financial markets are betting the ECB will sanction the first of a series of rate increases in July or September, after the Bank of England and the US Federal Reserve had already started to hike rates as inflation flares.