Wage growth differences driving central bank divergence in short term - economist

Record ID: 1756738

  • Title: Wage growth differences driving central bank divergence in short term - economist
  • Date: 14th December 2023
  • Summary: LONDON, ENGLAND, UNITED KINGDOM (DECEMBER 14, 2023) (REUTERS) (SOUNDBITE) (English) FINANCIAL ECONOMIST, SEBASTIAN VISMARA, SAYING: "Well, I think rate cuts will come in 2024. I think the ECB (European Central Bank) eventually at the next forecasts meeting in March will downgrade its outlook, particularly for inflation but also for growth, leading the way for rate cuts in
  • Embargoed: 28th December 2023 17:30
  • Keywords: Christine Lagarde ECB ECONOMY EUROPE European Central Bank FEDERAL RESERVE FEDS INFLATION MONEY
  • Location: LONDON, ENGLAND, UNITED KINGDOM
  • City: LONDON, ENGLAND, UNITED KINGDOM
  • Country: UK
  • Topics: Europe,Economic Events
  • Reuters ID: LVA001597314122023RP1
  • Aspect Ratio: 16:9
  • Story Text:A financial economist said on Thursday (December 14) that wage growth differences were driving central bank divergence in the short term as the European Central Bank reaffirmed that interest rates would remain at record high levels despite lower inflation expectations.
    Borrowing costs tumbled to multi-month lows earlier in the day, taking their cue from U.S. Treasuries after the Federal Reserve signalled on Wednesday (December 13) that it was done with interest rate rises, shifting the focus to when borrowing costs might drop.
    ECB President Christine Lagarde pushed back against rate-cut bets, but her job may have been made harder by the Fed's policy pivot.
    "The Fed has certainly taken comfort from the fact that wage growth has fallen despite the labour market remaining very robust," financial economist Sebastian Vismara told Reuters.
    "I think wage growth for both ECB and the Bank of England remain more worrying. The Bank of England still is facing wage growth at about seven percent, extremely high," Vismara said.
    The ECB, which left rates unchanged at its policy meeting, also signalled an early end to its last remaining bond purchase scheme, in a move which unexpectedly supported bonds of highly indebted countries.
    (Production: Alun John, Carla O'Connor)
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