European Central Bank policymaker and Bank of Finland Governor Olli Rehn said Wednesday that wage growth across the euro area remains relatively moderate, with little evidence that higher wages are creating a new wave of inflationary pressure.
In prepared remarks for a speech, Rehn said current wage trends and expectations do not point to significant second-round effects — a situation in which higher prices lead to stronger wage demands, which then contribute to further price increases.
Rehn emphasized that keeping inflation expectations stable will be important for preventing such a cycle from developing.
ECB Keeps Inflation Expectations in Focus
The comments come as the ECB continues to assess the balance between inflation risks, wage developments and economic growth when determining its monetary-policy path.
Moderate wage growth could provide some reassurance to policymakers because sustained acceleration in labor costs can make it harder for inflation to return to the central bank’s target.
However, the ECB remains focused on whether inflation expectations stay anchored as businesses and households respond to changes in energy prices, wages and broader economic conditions.
September ECB Meeting Ahead
The ECB’s next monetary-policy decision is scheduled for September 10.
Investors will closely monitor incoming inflation and wage data, along with comments from ECB officials, for clues about the central bank’s next policy move.
For financial markets, Rehn’s latest remarks suggest that wage pressures are not currently providing a strong reason for additional concern, although policymakers are likely to remain cautious while inflation risks continue to evolve.