The central bank is expected to cut interest rates in June, but a rise in workers’ salaries could impact the pace and rate of cuts.
The European Central Bank is set to leave its key interest rate at a record-high 4 percent on Thursday, as concerns over wage growth temper the urge to give more support to the economy.
At the Governing Council's last meeting in March, ECB President Christine Lagarde had indicated that the bank could start easing policy in June, and analysts say nothing material has happened to change that in the interim.
Headline inflation continued its downward drift in March, equaling a two-and-a-half** **year low of 2.4 percent, thanks largely to food and energy prices, but services price inflation — heavily influenced by local wage developments — remained stubbornly high at 4 percent. With survey data suggesting the economy has bottomed out in the near term, and with unemployment still near a record low, that all signals another month of wait-and-see.