ECB sees wage growth ahead as more rate hikes planned

Eurostat said the unemployment rate in the 20 countries now sharing the euro in November 2022 was 6.5% of the workforce

European Central Bank President Christine Lagarde has flagged another half-point hike at February’s meeting — “and possibly at the one after that” — to avoid a wage-price spiral. File photo: AP/Michael Probst

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 in an article to be published in its Economic Bulletin.