ECB Executive Board Member Isabel Schnabel acknowledged that the consensus that the path to disinflation is proving to be “quite bumpy,” especially as the process is in its “last mile”. The “biggest concern” is the persistent inflation within the services sector, which remains stubbornly high.
Schnabel emphasized the importance of closely monitoring unit labor costs. She noted at a conference today, “One aspect that we are looking at very vigilantly is the development of unit labor cost.”
“Wage growth remains relatively strong but it seems to be gradually easing in line with what we have in our projections,” she added.
However, Schnabel expressed particular concern over another crucial economic indicator: “The more concerning part is productivity growth,” she remarked, as Eurozone has been experiencing negative productivity growth for several quarters.
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