ECB faces bumpy road to low inflation as wages rise

Reuters, Francesco Canepa | Martin Höpner and Lucio Baccaro

Workers in Europe are hoping for higher wage settlements this year. These pay hikes increase costs for firms and boost household income. In this article for Reuters, Francesco Canepa illustrates why both of those factors might push up prices and require the ECB to keep rates high. Hence the ECB has singled out wages as the single biggest risk to its 1-1/2 year crusade against inflation. Among others, Lucio Baccaro, a director at the MPIfG, and Martin Höpner, a research group leader at the MPIfG, provide an assessment of the situation.
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