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Lagarde: Need Confirmation Of Unit Profits Absorbing ULC Rises

ECB

MNI Policy Team Q: What would be the ECB’s approach if inflation remains sticky around the 2.5% area? How much growth are you willing to sacrifice for a small deviation? Is your view that profits will continue to absorb unit labour costs?


A: While reaching the inflation target in a timely manner, we also project economic recovery during the second half of 2024, 2026 and 2026. We stick to our projection. The errors in our projections have reduced, which makes us more confident, but not sufficiently confident yet.


A: This is not quite the case yet. We want to see that movement confirmed – moderation of wages and the reduction of profit margins, so that the unit profit cost absorbs part of the unit labour cost.

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