📝Do Not See Much Scope For ECB Rate Cuts Next Year: Commerzbank

The core inflation rate is even likely to settle above 3%. This is because with wages rising much more strongly, companies in the service sector in particular are facing the next wave of costs. According to the ECB, collectively agreed wages in the first and second quarters of 2023 each increased by 4⅓% year-on-year (Chart 3). According to the monthly data of the internet platform Indeed, which were processed into an indicator for (offered) wages in cooperation with the Irish central bank, wage growth is still strong, even if it has weakened slightly since May. In this respect, the ECB expects further strong wage increases of 5¼% this year, followed by 4½% in 2024.

The ECB is unlikely to see much scope for interest rate cuts in the coming year, which is why, unlike the market, we expect stable key ECB interest rates for the whole of 2024. This is also supported by the fact that the ECB has raised its interest rates far less than the US Federal Reserve, for example, and thus its policy is probably less restrictive. - Commerzbank