Wage Growth Slows, Trend Expected to Continue Through First Half of Next Year
Global Trade Policy Risks Remain
New Economic Outlook to Be Presented at December 18 Meeting
"We expect the inflation rate to remain near the 2% target for the next several months."
Christine Lagarde, President of the European Central Bank (ECB), indicated on December 3 (local time) during the Economic and Monetary Affairs Committee of the European Parliament that inflation in the eurozone (the 20 countries using the euro) has stabilized, suggesting that the current policy of holding interest rates steady may continue for some time.
President Lagarde explained that inflation has stabilized thanks to wage growth slowing from 5.7% in the second quarter of 2023 to 3.9% in the second quarter of this year. She also predicted that wage increases would slow further through the first half of next year.
However, she noted, "The risks to the (inflation) outlook remain two-sided, and uncertainty is higher than usual due to global trade policies," emphasizing that monetary policy decisions will continue to be data-driven.
In November, the eurozone's consumer price inflation rate rose 2.2% year-on-year, while core inflation, which excludes volatile items such as energy and food, increased 2.4%. Both figures were up 0.1 percentage point from October, representing a slight year-on-year increase.
However, as inflation has stabilized around 2.0% this year, monetary authorities have declared that they have effectively won the battle against inflation that persisted for several years following the COVID-19 pandemic. The ECB projects next year's inflation rate at 1.7%.
From June last year to June this year, the ECB cut its policy rate by a total of 2.00 percentage points over eight rounds. In the three subsequent monetary policy meetings, the ECB has kept rates unchanged, maintaining its stance that there is "no rush" to lower rates further.
The ECB will hold its final rate-setting meeting of the year on December 18. President Lagarde announced that she will present a new economic outlook at this meeting, including projections for 2028. In the market, there are mixed views: some expect the ECB to cut rates once more next year, while others believe the current rate-cutting cycle has already ended.
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