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European trade unions warn interest rate hikes will hurt economy

European trade unions warn interest rate hikes will hurt economy

European trade unions warned Wednesday that further interest rates would put Europe's economic recovery at risk, telling the European Central Bank that it was wrong to anticipate accelerating wage increases.
The ECB is expected Thursday to raise rates a quarter percentage point to 3.25 percent _ the fifth hike over the past year _ fearing the knock-on effect on inflation from oil-price rises and a stronger economy.
But the European Trade Union Confederation said a study it published Wednesday showed the ECB's concerns about higher-than-expected wage increases were "totally unfounded" and wages would not cause inflation to rise.
Instead, it said a rapid hike in interest rates, coupled with flatter wage increases, would put growth at risk.
"If the euro area is to experience continued growth, then the recovery needs to become self-reliant," said ETUC General Secretary John Monks. "European workers need a raise, and the ECB must realize that reasonable wage increases are part of the solution and not part of the problem."
The ETUC study said recent wage agreements show average increases of 2.5 percent _ close to recent year-on-year inflation figures.
"The upper limit for inflationary wage growth, estimated at around 3.5-4.5 percent, is light years away," it said.
The ECB controls monetary policy for the 12 countries that use the euro. Inflation in the euro-zone dropped to 1.8 percent in September, the EU's statistical agency said last week.
Before September, inflation had stayed well above ECB guidelines of just under 2 percent since the summer of 2005.
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On the Net:
http://www.etuc.org/IMG/pdf/price_stability-study.pdf


Updated : 2021-04-23 06:36 GMT+08:00