ECB Is Planning To Give Investors A Glimpse Of Key Wage Indicators
That prospect would offer investors a fuller version of the picture that officials are getting on the strength of pay pressures in the economy.
(Bloomberg) -- The European Central Bank is planning to routinely publish internal pay measures being used by officials to gauge inflation risks as they consider when to cut interest rates.
The so-called wage trackers, which are designed to deliver data on salaries in a speedy manner and are often cited by policymaker in speeches, will be made openly available “later this year,” according to an spokesperson.
That prospect would offer investors a fuller version of the picture that officials are getting on the strength of pay pressures in the economy.
Depending on when the trackers emerge, the greater visibility could coincide with the start or continuation of an ECB rate-cutting cycle, assuming market bets — for June — turn out to be correct.
The Frankfurt-based institution has developed the measures together with national central banks to make up for a lack of coherent and timely data from around the region.
Without them, policymakers would face a shortfall in one category of information that they consider to be crucial to their assessment of inflation. Such numbers on wages and labor costs could signal whether strong pay pressures risk entrenching faster price growth.
On Wednesday, ECB President Christine Lagarde cited pay growth as the first of three things — along with profit margins and productivity growth — that officials are watching closely.
She highlighted the internal wage measures, and added that the forward-looking tracker “is showing early signs that pressure is easing.” Average wage growth in 2024 for all existing wage contracts fell to 4.2% at the time of the March meeting from 4.4% in January, Lagarde added.
In a bulletin article released on Wednesday, ECB staff speculated that high pay increases will result in an only gradual slowdown in food inflation, even if shocks are fading from energy, global commodity costs and euro-area farm prices.
ECB Chief Economist Philip Lane recently observed that the most comprehensive salary measure from national accounts arrives with a delay of more than two months.
With many pay deals up for renewal early in 2024, updates to the wage trackers will provide “essential information,” he said.
ECB staff said in an occasional paper last month on the measures that the euro area’s elevated wage growth has yet to reach an inflection point. Lane added last week that salaries are moving in the right direction.
(Updates with Lagarde in seventh paragraph, ECB article in ninth)
More stories like this are available on bloomberg.com
©2024 Bloomberg L.P.
