Lagarde warns of recovery in eurozone wages

European Central Bank chief Christine Lagarde confirmed on Monday that wages are starting to “rise” in the euro area, although the increase was “moderate” and lower than expected. wage increases discussion “It will strengthen and stay above forecasts for the remainder of the year,” he said, “due to some compensation effects from labor market tensions, increases in minimum wages and higher inflation rates.” european parliament economic affairs committee which confirmed next rate hike and preparations new anti-fragmentation tool controlling risk premiums.

The evolution in wages is reflected in the rise in long-term inflation expectations, which ECB experts have revised significantly upwards. According to the latest forecasts, inflation will rise to 6.8% this year before falling to 3.5% in 2023 and 2.1% in 2024, meaning it will still be slightly above target at the end of the horizon. “It is perfectly legitimate to have these (salary) increases, but this is very important and it is our duty as the European Central Bank to maintain price stability and an inflation perspective of around 2% and not subject it to an oversupply on our part. this is far beyond 2%”, explained the authority of the institution.

monetary normalization

Hence the series of measures taken by the ECB’s governing council at its last meeting on 9 June to tighten monetary policy after a record inflation rate of 8.1% in May. That battery includes ending net borrowings as of July 1, raising interest rates by a quarter point at the monthly meeting in July, and possibly a second, or even higher—probably a quarter-point increase in September. on the medium-term inflation outlook

If the medium-term inflation outlook persists or deteriorates, a larger increase would be appropriate at our September meeting. It will depend on the data and how we evaluate the evolution of inflation over the medium term.”

anti-fragmentation tool

Lagarde also acknowledged that the pandemic has left “persistent vulnerabilities” in the eurozone economy, which “contribute to the erratic transmission” of monetary policy among eurozone countries, and assured that they will do everything possible to do so. There is sufficient transfer as it is a necessary “prerequisite” for the ECB to fulfill its price stability mandate. extraordinary meeting of the board of directors After the rise in risk premiums in countries like Italy. First, flexibly implement the repayment of public debt falling into the Pandemic Emergency Program (PEPP) portfolio. And second, to speed up the design of the new anti-fragmentation tool to avoid large disparities in initial risks.

“I know it’s tempting to ask me about differentials, forks, benchmarks, speeds or frameworks that will be applied to me, but I’m not going to answer them. As I understand it, it is a question on many people’s minds, but the studies are ongoing.” “Suffice it to say that if this risk arises, fragmentation will be addressed and it will be done with the appropriate tools and with the necessary flexibility. (The new tool) will be effective, proportionate and in line with our mandate,” he said, warning that “anyone who doubts our resolve will make a grave mistake.”

Source: Informacion

Popular

More from author

Biden invited to Congress to testify about relatives’ involvement in business 01:02

United States President Joe Biden has been invited to testify before the House Oversight and Accountability Committee about his possible involvement in the affairs...

Hundreds of billions of rubles will be allocated to tourism in Russia 03/28/2024, 19:32

At least 403 billion rubles will be allocated from the federal budget for the implementation of the national project for the development of the...

A psychologist warns of dangerous consequences of doomscrolling 01:00

In psychology, the phenomenon of “doomscrolling” is a compulsive behavior that drives you to constantly look at news feeds for fear of missing something...

The General Staff assured that the soldiers who completed their military service this spring will be discharged on time 00:51

Soldiers whose terms of service will expire this spring will be discharged on time. This was announced by Colonel General Evgeny Burdinsky, head...