ECB survey points to cooling wage and price pressures as rate path stays in focus

Eurozone firms expect wage demands and the prices they charge to grow more slowly, according to the European Central Bank's latest quarterly survey of companies — a signal that inflationary pressure in the bloc may be easing. The ECB surveys businesses across the euro area each quarter on expected wage growth and selling-price inflation; the readings are closely watched by policymakers as they weigh where to set interest rates. Reuters reported Monday that the newest survey showed both measures moderating. Cooling wage and price expectations would bolster the case for the ECB to keep easing policy, after a long stretch in which stubborn wage growth — particularly in services — kept officials wary of declaring victory over inflation. The euro area has been emerging from a period of elevated inflation that peaked after the energy shock of 2022. The findings land as major central banks weigh divergent paths. The U.S. Federal Reserve has faced political pressure for rate cuts even as some officials have signaled possible hikes amid geopolitical energy shocks, while the ECB has been gradually normalizing policy as price growth approaches its 2% target. Still, ECB policymakers have stressed that services-sector wage growth and core inflation remain key risks, and any renewed energy-price surge from the conflict in the Middle East could rekindle cost pressures across the euro area. *Source Reporters corrects errors promptly. Report corrections to corrections@sourcereporters.com.*