ECB Gets Room to Breathe as Eurozone Wage Growth Slows

The European Central Bank (ECB) may not need to raise interest rates again soon due to cooling wage growth in the Eurozone.

Pay deals between unions and employers rose by only 2.56% in the second quarter compared to last year, a significant drop from the peak of 5.55% hit in 2024 when energy prices were still surging.

This is seen as a reassuring signal for the ECB, which has been closely watching wage growth due to its potential to create price-wage spirals.

ECB President Christine Lagarde said in July that pay growth was staying moderate and that her bank's projections see wage increases remaining below 2024 peaks through early 2027.