Euro Zone Wage Growth Slows in Q2

Negotiated wage growth in the euro zone slowed in the second quarter, providing a potential basis for the European Central Bank (ECB) to consider another interest rate cut in September. The growth rate fell to 3.55% from 4.74% in the previous quarter, largely driven by a significant slowdown in Germany. Despite this, there are concerns that wage growth excluding one-off payments is still high, which could continue to pressure inflation. Finnish policymaker Olli Rehn supports a rate cut next month, and markets see a more than 90% chance of this happening. Additionally, a slight easing in Germany's skilled labor shortage has been observed due to a weakening economy, though demographic trends suggest long-term challenges. The ECB aims to bring inflation down to its 2% target, with wage growth being a key focus for policy adjustments.