Help
Eurozone wage growth hits three-decade high, complicating ECB’s policy path
Eurozone wage growth surged to a 31-year high, UK inflation exceeded expectations, and China's central bank held rates steady amid ongoing economic challenges
Eurozone Q3 wage growth hit 5.42%, the highest since 1993
UK inflation rose to 2.3% in October, above BoE's target
China kept key lending rates steady at record lows
Negotiated wages in the Eurozone soared to 5.42% in the third quarter of 2024, marking the sharpest increase since early 1993, according to official data. This jump from the 3.54% growth recorded in the previous quarter underscores significant upward pressure on wages, particularly in Germany, where salaries surged by 8.8%.
The spike in wage growth poses challenges for the European Central Bank (ECB) as it navigates monetary policy amid easing inflation. With the ECB’s final meeting of the year approaching, expectations for rate cuts in 2025 may face headwinds from persistent wage inflation. While ECB officials have hinted at further easing to address weak economic activity, concerns remain over wage-driven inflation, particularly in the services sector.
UK inflation breaches BoE target as energy costs surge
UK annual inflation climbed to 2.3% in October, its highest level in six months and up sharply from 1.7% in September, official figures showed. The increase exceeded the Bank of England's (BoE) 2% target and market forecasts of 2.2%.
The main driver of the rise was housing and household services, particularly electricity and gas costs, following adjustments to the Ofgem energy price cap. The unexpected acceleration in inflation could complicate the BoE’s efforts to maintain stable price growth while supporting the economy amid persistent uncertainties.
China holds lending rates steady as stimulus efforts persist
China’s central bank maintained its benchmark lending rates at the November fixing, in line with market expectations, as policymakers weigh the impact of recent stimulus measures on the struggling economy.
The People’s Bank of China (PBoC) kept the one-year loan prime rate (LPR) at 3.1% and the five-year LPR, which influences mortgage rates, at 3.6%. Both rates are at historic lows after reductions earlier this year.
Beijing has ramped up efforts to revitalize growth, with the government targeting a 5% GDP expansion for 2024 despite persistent challenges, including property sector instability and weak consumer confidence. The central bank is expected to introduce further easing measures, including a potential cut to the reserve requirement ratio by 25 to 50 basis points before year-end, Governor Pan Gongsheng said in October.
