Wage growth threatens further interest rate cuts this summer, hints ECB

However, Governing Council member Francois Villeroy de Galhau said the ECB should not rule out lowering borrowing costs at both its June and July meetings

The ECB is prepared to cut interest rates at its June 6 meeting, but policy must continue to be restrictive this year as wage growth will not normalise until 2026, said European Central Bank chief economist Philip Lane.

European Central Bank chief economist Philip Lane kept a lid on whether the regulator will implement further cuts after its meeting next week.

While speaking to the Financial Times, Mr Lane indicated policymakers continue to keep a sharp eye on wage growth across the eurozone, which continues to threaten the ECB’s inflation target of 2%.