A basic indicator of growth of wage In the eurozone, he fell, supporting the claim of the European Central Bank (ECB) that inflation will soon reach its 2% target and reinforcing calls for further reduction in interest rates.
Negotiating wages (set after collective bargaining) increased by 2.4% compared to last year, the ECB announced Friday (23.5.2025). This is lower than 4.1% in the last three months of 2024 and less than half of the 5.4% top recorded last year. The evidence reinforces the idea that wage pressure is cold and will eventually translate into a miraculous underlying inflation that has so far proved persistent.
Services, where wages play an important role, increased by 4% in April. “We see that payroll contracts actually have quite low settlements for this year, even lower for the following year,” ECC leading economist Philip Laine said on Friday. “Thus, we are confident that the inflation of services will be reduced.”
The officials were also optimistic that general inflation, which was kept at 2.2% last month, would achieve the goal in the coming months. The European Commission provides that it will fall to 2% by mid -2025 and will be less than that of 2026, partly due to US duties and impact on financial markets.
The Board of Directors is expected to reduce interest rates for the eighth time in this cycle when it meets next month. Traders bet on yet another move after this year, a perspective that officials, including Belgian Pierre Wunsch, said it was “reasonable”.