The European Central Bank (ECB) is relieved as new data shows that wage growth in the eurozone is stabilizing, although it remains a concern for central banks worldwide. Hourly labor costs in the eurozone were 4.5% higher in the April to June period compared to last year, but the pace of growth has slowed. The ECB had previously suggested that interest rates could rise again in December if inflation and wage growth remained high. The issue of labor costs is particularly acute in Germany, the UK, and the US. In the UK, wage growth is at record levels and is the main cause of inflation in the services sector. The Bank of England is expected to raise interest rates again, which could result in the highest borrowing costs since 2008. In the US, inflation is higher than expected, partly due to rising petrol prices. However, consumer survey data shows that year-ahead inflation expectations have fallen to an 18-month low. The impact of higher interest rates on the economy is a key concern for policymakers, with some studies suggesting that it could hinder innovation and growth.

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By hassani

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