ECB Economist Lane Predicts Italian Wage Recovery by 2027-28

European Central Bank Chief Economist Philip Lane has expressed optimism about Italy's economic resilience, predicting that wages will outpace inflation in 2027 and 2028. In an interview with ANSA, Lane highlighted that the Italian economy's solid performance should lead to improved real wages and living standards in the coming years, despite current inflationary pressures driven by the Iran war.

Lane emphasized the 'fundamental solidity' of Italy's economy, noting that the ECB's September projections indicate stronger wage growth than inflation for 2027 and 2028. He acknowledged the challenges posed by high energy prices, which he described as a collective loss for the European economy, but stressed that the ECB's rate hikes were necessary to prevent harmful long-term inflation.

Addressing criticism of the ECB's rate hikes, Lane argued that unchecked inflation would have been detrimental to Italian workers and households. He also commented on Italy's request for flexibility in EU budget rules, advocating for targeted income support rather than broad fiscal expansion to combat inflation effectively.