MNI BRIEF: Inflation Not Yet Sure To Hit Target On Time- Nagel
While overall trend is downwards, service sector price increases and wage pressures add note of uncertainty, Buba boss says
The return of inflation to the European Central Bank's 2% target is not a “foregone conclusion,” Bundesbank president Joachim Nagel said in a speech on Monday, with service prices and wages two possible sources of continued price pressure.
While inflation should continued to trend gradually downwards, reaching 2% towards the end of 2025, Nagel noted that May’s service prices rose by 4.1% year-on-year.
“This reflects the above-average wage increases in particular. From the trade unions' point of view, these should partly compensate for the loss of real wages over the past three years," he said, "I don't see us on a mountain top from which things will inevitably go down. Rather, I see us on a ridge where we still have to find the right point for the further descent,” he said. (See MNI SOURCES: September Rate Cut In Sight For ECB)