- There are increasing signs of a bottoming-out in growth and some forward-looking indicators point to a pick-up later this year.
- Wage pressures, meanwhile, remain strong.
- The current disinflationary process is expected to continue, but the governing council needs to be confident that it will lead us sustainably to our 2% target.
- Labour cost increases are partly buffered by profits and are not being fully passed on to consumers.
- We expect inflation to continue slowing down, as the impact of past upward shocks fades and tight financing conditions help to push down inflation.
- Our restrictive monetary policy stance, the ensuing strong decline in headline inflation, and firmly anchored longer-term inflation expectations act as a safeguard against sustained wage price spiral.
- Wage pressures meanwhile remain strong
A constant theme is wage costs and its impact on inflation, and also help it may limit rate cuts.
The EURUSD is marginally lower but only by a few pips…
This article was written by Greg Michalowski at www.forexlive.com. Source