European Central Bank President Christine Lagarde said on Saturday that the euro zone’s labor market shows no sign of slowing, despite a near-recessive economic environment and a record series of interest rate increases.
Speaking during the annual meetings of the World Bank Group and the International Monetary Fund in the Moroccan city of Marrakesh, Lagarde said, “The labor market does not yet show any real sign of weakness… The numbers that we see, whether in terms of actual participation in unemployment or unemployment in nominal numbers, are very striking.” .
The European Central Bank raised interest rates to curb the wave of inflation that hit the world after the Russian war in Ukraine, and the continuing decline in unemployment is a major reason why some ECB policymakers worry that high inflation may remain above target as workers enjoy one of the best wage growth. years ago.
Regarding inflation in the euro zone, Lagarde confirmed that core inflation in the euro zone remains strong, pointing to the historical growth in wages.
The minutes of the European Central Bank’s September monetary policy meeting revealed on Thursday that some members expressed their preference for keeping key interest rates at current levels. The majority also expressed their support for the recent interest increase.
“In fact, employees are demanding compensation for the loss of purchasing power amid tight labor markets,” she added, expecting wage growth to gradually decline.
The European Central Bank raised interest rates to their highest level in more than two decades, and debate began to escalate among policymakers over whether to pause, especially in the face of growing signs of economic weakness.
The European Central Bank raised interest rates from negative 0.5 percent to 3.75 percent in just over a year to combat rising inflation, which has since begun to decline.
Lagarde also said that assessing the impact of previous interest rate increases remains crucial.
She explained that negative risks include weak demand, due, for example, to a stronger monetary policy transmission or to a deterioration in the international economic environment.
Lagarde offered a similar view on expansion prospects. “Growth may be slower if the effects of monetary policy turn out to be stronger than expected, or if the global economy weakens further and geopolitical risks intensify,” she said.
She considered that “the rise in real income and the decline in uncertainty enhance confidence between consumers and companies, and push them to spend more.”
2023-10-14 16:42:11
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