ECB Negotiated Wages Data: Key Factor for Monetary Policy Decisions

Tuesday, 20 February 2024, 08:45

The negotiated wages data for the Eurozone to be released today holds significance as the ECB closely monitors it. The trend of rising wages may influence the central bank's decision on rate adjustments, with expectations of a possible rate cut in April. Market uncertainties persist as analysts await the data to gauge its impact on the euro and the broader monetary policy landscape.

ECB Negotiated Wages Data and Eurozone Outlook

Keep an eye out on the euro in European morning trade, with negotiated wages data in the spotlight for the Eurozone. There's no estimate or consensus on the number but the call seems to be for wages to reflect a 4.4% or 4.5% year-on-year reading.

Impact on Monetary Policy

The ECB has made it clear that this is a key factor that they are watching, but I would argue more so for Q1 2024 than Q4 2023. In that lieu, it stands to reason why policymakers might wait until May at the earliest before deciding to communicate any clear pivot on rates.

The trend has been showing a steady rise in negotiated wages since 2022, so any drop from the previous reading of 4.7% will be much welcome. I don't think this will have too much of an impact on the euro but it depends on how much it will shift the rates pricing. As things stand, the odds of an April rate cut are at ~51% so far today.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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