European Central Bank Chief Economist Lane: Next year's wage growth will significantly slow down

Jinshi Data News on August 29th. Liam, the chief economist of the European Central Bank, said that the growth rate of wages (a key driver of inflation) in the euro area will slow significantly in 2025 and 2026. “In the second half of this year, the growth rate of wages is still not small,” Liam said, citing the European Central Bank’s own wage trend tracking index. However, now such a “catch-up trend is peaking”, and there will be “significant changes” in the next two years, causing “much lower nominal wage growth rate”. Investors are betting that the European Central Bank will cut interest rates two to three times this year and take further action in 2025. Liam pointed out that “a lot of progress has been made in reducing basic price pressures”, highlighting the growing optimism about the slowdown in wage growth. “This is also the source of confidence that inflation will return to target,” he said.