MNI BRIEF: ECB Eyeing Wages, Profits and Productivity -Lagarde

The European Central Bank is not yet “sufficiently confident” that inflation is on a sustainable path towards its 2% target and will focus on wage growth, margin profits and productivity growth to confirm it, President Christine Lagarde said Thursday as she restated her message that policymakers will have more information by April, buy "a lot more by June".

Even if wage growth and profit margins are seem to be in line with the ECB’s target, the sensitivity analysis by the ECB shows that full catch up in wages this year would push inflation to 3% in 2025 and 2.5% in 2026, Lagarde told an ECB Watchers conference in Frankfurt.

The sensitivity analysis show that if profit margins rise by 1 percentage point more than projected by the end of 2026, inflation would rise to 2.7% in 2025 and 2026, Lagarde said. MNI speaks to Bundesbank President Joachim Nagel on Friday, when many of these issues will be discussed (INVITATION: MNI Webcast with Bundesbank's Joachim Nagel On Mar 22)