Too rapid wage growth in the euro area is a risk that could contribute to inflation remaining at record levels for longer in euro-denominated countries. That is why the European Central Bank should continue to raise interest rates, ECB chief Christine Lagarde said.
High wage growth above expectations
“We see that wages are rising, probably at a faster pace than we expected,” European Central Bank President Christine Lagarde told the Croatian daily Jutarnij list. “I must not allow inflationary expectations to be unhinged or wages to have an inflationary effect,” she added.
The ECB will only take the necessary measures
While Lagarde did not talk about any new measures the ECB could possibly take, she confirmed that the bank under her leadership would “take the necessary measures” to reduce inflation to two percent from the current ten percent.
The ECB has previously made it clear that it is prepared to raise interest rates further if inflation so requires. The European Central Bank has already raised base interest rates by 2.5 percentage points since last July, the fastest rate rise in its history.