Will interest rates continue to fall? – Wages in the eurozone are rising sharply

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Wages in the eurozone rose significantly over the summer. This plays a major role in the decision whether interest rates will be lowered again this year.

The monetary authorities always look closely at wage growth in the community of twenty countries, as it is considered one of the most important inflation factors. Collectively agreed wages rose by 5.42 percent in the third quarter, the European Central Bank (ECB) announced in Frankfurt on Wednesday. In the second quarter, collective wages increased by 3.54 percent.

The ECB targets an inflation rate of 2.0 percent as the ideal value for the eurozone. Wage growth of around three percent was recently considered compatible with this objective. At the upcoming interest rate meeting on December 12, wage data will likely play a major role in deciding whether the ECB will cut rates for the fourth time this year. The euro watchdogs are currently discussing to what extent interest rates should be reduced.

Start of the interest rate turnaround in June
During the October interest rate meeting, the Euro Central Bank lowered the deposit interest rate, which is relevant to the financial market, by a quarter of a percentage point to 3.25 percent. The interest rate at which banks can receive fresh money from the central bank was also reduced by 0.25 percentage points to 3.40 percent. This was the third interest rate cut this year since the interest rate turnaround started in June.

Source: Krone

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